More flexible finance options are needed in the UK as 28% of SMEs are being turned down for funding. That is the finding from a survey of 500 SMEs by invoice finance company Novuna Business Cash Flow, which highlights the critical need for more accessible and flexible financing options for small and medium-sized enterprises if they are to survive.
The survey revealed a concerning statistic: 34% of SMEs are at risk of closing their doors permanently if they are unable to secure necessary funding. This alarming figure contrasts sharply with the surprising revelation that 50% of SMEs have not sought any form of financial assistance since November 2023, despite the precarious position many find themselves in.
The reluctance to seek financing during these difficult times can be attributed to a variety of factors. A significant portion of respondents (43%) believe that the current economic conditions have exacerbated the difficulty of accessing funding. Additionally, a concerning 28% of the businesses surveyed reported being turned down for funding since November 2023, further discouraging attempts to secure much needed financial support.
Highlighting the urgency of the situation, nearly a third (29%) of SMEs surveyed have found themselves applying for business funding for the first time ever since November 2023. This statistic not only reflects the growing financial strain on businesses but also the changing landscape of SME financing.
These findings highlight the urgent necessity for enhanced and adaptable financing solutions for SMEs to ensure their survival.
John Atkinson (pictured), Head of Commercial and Strategy at Novuna Business Cash Flow commented, “In light of our recent survey findings, it's clear that SMEs are facing unprecedented financial challenges, with 34% on the brink of closure due to funding shortages. Surprisingly, half of these businesses haven't even applied for financial help since November 2023, a decision influenced by tougher access to funds and previous rejections. As we navigate these turbulent times, our focus must be on creating a more supportive financial environment that acknowledges the evolving needs of small and medium-sized enterprises."
