Recent research by Albion Ventures has shown that whilst banks are more willing than ever to lend, small businesses are not taking advantage of the money available to them. Could this mean that Britain’s SMEs are scared to grow?
Following the recession, we’ve all been aware that the one thing holding back the expansion of businesses has been a lack of funding from the banks, who have been wary of loaning and getting little back from it. However, statistics now show that of the SMEs that applied for a loan in the past twelve months, 80% have been successful – showing that the banks have caved to the pressure they were under to lend after repairing their balance sheets.
This fact is what makes the next so shocking: only one in ten small businesses looked to raise finance during the same period. This statistic does not sit comfortably with the fact that Britain’s economy is fast recovering, with a raft of policies aimed at benefiting smaller, growing businesses. Albion Ventures’ research shows that less small businesses applied for finance in this period than in the same period a year previous.
Two explanations have been given for this low figure; firstly many business leaders have a lack of belief in the sustainability of economic recovery, with managing directors and leaders fearing external events impacting the UK economy. A second explanation is that there is now a culture of leaders being scared to take risks – with the recession leading them to play it safe, and become unable to exploit the new opportunities available to them.
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