‘Sky-high’ borrowing rates deterring SMEs

04 Feb 2019

Borrowing costs for small and medium sized businesses (SMEs) are soaring, new research finds.
 
According to a report published by the Federation of Small Businesses (FSB), the proportion of successful credit applicants being offered a borrowing rate of 5 per cent or more has hit a record-high of 74 per cent.
 
The proportion of small firms applying for external finance remains stubbornly low at around one in eight (13 per cent).

FSB Chairman, Mike Cherry, comments: “With Brexit taking up all of the Government’s bandwidth there are a huge number of domestic business issues that are not being addressed. They include the long-standing barriers small firms face when trying to access new finance, and the sky-high borrowing rates they’re often offered if an application is successful.
 
“This is another issue that will be exacerbated by a chaotic no-deal Brexit. When times are tough, big lenders often put supporting small businesses on hold.” 
 
Banks remain resistant to lend to SMEs, which is a cause for concern across the business community. Adding to this, there is a perceived reluctance among UK banks to invest in risk and innovation, indicating a significant need for alternative financing options.
 
The SME sector contributes more than £200 billion a year to the UK economy and, according to the Centre for Economics and Business Research, this is set to grow to £240 billion by 2025. Yet, without a vital cash injection, this 2025 vision will be severely hampered.
 
With demand for alternative finance likely to increase, what is essential is that SME’s choose a specialist adviser who can recommend the right financial products for their specific business needs.
 
Our partner business, BM Structured Finance, specialises in sourcing and restructuring debt finance for SME businesses. We match the most suitable products to each individual circumstance and work together to ensure compatibility and satisfaction, thereby enhancing the business’ cash flow liquidity and facilitating maximum growth.
 
Whether you are a start up or a well-established business, cash is king and managing its flow is crucial to your long-term success. For more information about how BM Structured Finance can help you and your business, contact Simon Belton or your usual Beavis Morgan Partner.