Originally written by Timothy Adler on Small Business
A huge 99.9pc of the UK’s 5.7 million private sector businesses are SMEs, making them crucial for a healthy economy and jobs market. But the failure rate of SMEs is staggering, with less than half surviving beyond the first five years. Maintaining operating cash flow is a massive cause of business failure because of the way business lending for SME finance is assessed.
Funding is a major barrier to SME growth, with more than half of SMEs struggling to get the funding they need to help boost productivity develop their product offerings and scale as a business, according to Close Brothers.
Often, many resort to selling stakes of equity to secure the much-needed cash that could take their business to the next level.
Difficulties SMEs face getting funding
Small businesses often struggle to get funding as they are deemed too much of a risk and are not making enough turnover to convince prospective lenders. Heritage banks require businesses to have strong personal and business credit scores— and the latter may not be something an SME will have if they haven’t taken out a business loan in the past, or if they have existing debt from other lenders.
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