7 reasons why small businesses need access to finance


The UK’s 5.7 million small businesses are the lifeblood of the UK economy.

Currently these small businesses contribute more than £200bn a year to the UK economy and, with more than 1,000 starting up every day, this number is expected to grow by almost 20% by 2025.

But this level of growth is only achievable if small businesses have adequate access to finance.

New research from Hitachi Capital revealed the many areas in which a small business can be negatively impacted due to inadequate access to finance.

This highlights why it is so important for small businesses to explore all of their options and find the most suitable finance facility for their needs.

Failure to find the right funding option could result in the business struggling to reach its potential.

Here we look at seven activities that small businesses can achieve with access to suitable finance and show how your business can find the right facility for its needs.

1. Grow their business

Business growth is high on the agenda for many small businesses, but the research revealed that almost one in two (49%) felt that they would be unable to grow their business without access to finance. This number rises to 86% of companies already struggling to grow.

Without adequate finance some businesses may find it hard to cope with increased demand, and the extra pressures on their cash flow can lead them to breaking point.

Fortunately, a whole host of small business funding options have developed and evolved to provide more choice when it comes to improving cash flow and securing growth finance.

While traditional bank lending is still a common choice, the likes of invoice finance and asset finance solutions have boomed as more and more small businesses realise the benefits. 

Discover more about finance for business growth

2. Hire new people and invest in training

Having the right, skilled people can be crucial to a company’s development, but the research showed that one in four small businesses would struggle to increase headcount without the ability to borrow money in the next 12 months. This rises to 55% of those struggling to survive.

Likewise, for many small businesses their staff are their most important asset and investing in training for them can encourage staff loyalty and improve their skills. But 15% of small businesses said that they would be unable to invest in staff training programmes without access to finance.

Recruiting and retaining employees can be a costly exercise. Not only do you need to consider advertising, interviewing, hiring and training fees, once you have found the right candidate you’ll need to ensure you have enough working capital to pay their salary and other associated costs each month.

There are numerous funding options which can be utilised in order to improve cash flow so that you can pay your employees and associated costs on time.

Discover ways to improve cash flow to pay PAYE

3. Run a marketing campaign

In a massively competitive business landscape, effective marketing is essential for small businesses, particularly in the early stages. But without access to finance 19% of small businesses said that they would be unable to run a marketing or advertising campaign.

Similarly, a small business’s brand determines how that company is perceived by customers, employees and beyond. And shaping these perceptions is vital to business success. But without access to finance, 13% of small businesses would not be able to invest in a new company brand or website.

Thanks to new technologies and the rise of social media there are numerous ways to cheaply market your business, however some of the more traditional methods can be quite costly.

In order to pay for these marketing costs many small businesses will simply look for ways to improve their cash flow either through securing new funding or getting paid sooner by customers.

Discover ways to improve cash flow

4. Launch new products or services

Launching a new product or service can open a small business up to new opportunities that can support company growth. But 18% of small businesses said that lack of financial support would result in them shelving plans to launch new products or services.

For those looking to launch new products or services the rise of alternative finance solutions such as crowdfunding and peer-to-peer lending provide a useful alternative to traditional loans and overdrafts, which can be more challenging to secure.

Discover more about these alternative finance options

5. Move to a better location

From cost savings to supporting growth and even talent management, there are many benefits of relocating a small business. But 18% of small businesses said that they would be unable to move to a better location or bigger space without adequate access to finance.

A commercial property mortgage can allow small businesses to expand their business with new or larger premises or even refurbish or extend office or factory space.

And, for those who may not be able to raise the necessary deposit, other funding solutions are available which either release the cash that’s required to raise a deposit or provide the funding to help cash buyers succeed.

Discover more about finance to buy commercial property

6. Compete with larger competitors

Small businesses face heavy competition not just from other small businesses, but also from large corporations who often have more money and greater resources behind them. So, perhaps it’s not surprising that 18% said that a lack of financial support would make them unable to compete with larger competitors.

One of the biggest challenges for small businesses in this situation is being able to fund large orders. Having the necessary money and resource upfront to satisfy these substantial orders before getting paid can put a massive strain on cash flow.

Fortunately, a range of funding options, such as invoice finance, exist which enable businesses to raise finance to fulfil orders and meet their day-to-day commitments before getting paid.

Discover more about raising finance for large orders

7.Invest in new machinery or equipment

Investing in new machinery and equipment is essential for small businesses to remain competitive and continue effective operations. But without access to finance, 15% would be unable to invest in new production lines or machinery. Also, 16% felt that they would be unable to invest in new vehicles if they were unable to access finance.

Likewise, in order to remain competitive, small businesses need to modernise their IT capability. Whether that involves moving away from ageing software or shifting to newer, often automated technologies, it can be costly and 16% of small businesses would not be able to do it without access to finance.

Regardless of how well your business is doing financially, finding the money to purchase the equipment you require outright can have a significant effect on cash flow.

Fortunately, there are funding solutions, such as asset finance, that will help you buy the plant or machinery you need whilst minimising the impact it will have on your finances. 

Discover more about raising finance to buy plant and machinery

Finding the right finance facility

With so many products and providers to choose from, finding a suitable finance facility for your needs can be challenging, especially for time-strapped business owners who don’t have the resources to dedicate to an effective search.

In order to remain successful it’s vital to find a facility that ticks all the right boxes and not just settle for the first application that gets approved.

That’s where we come in. If your small business needs access to finance, as the UK’s trusted commercial finance broker we could identify the most suitable facility for your needs.

We will get to know your business and its requirements before introducing you to the funders and products that are most suited.

Contact us on 0800 9774833 or request a call back to discuss your requirements with a member of our team.
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Some of the funders we work with

  • Regency Factors
  • PNC Business Credit
  • eCapital Commercial Finance
  • Pulse Cashflow Finance
  • Royal Bank of Scotland
  • Kriya
  • Aldermore Invoice Finance
  • Merchant Money
  • Nationwide Finance
  • Cynergy Business Finance
  • Peak Cashflow
  • Tradeplus24
  • Berkeley Trade Finance Ltd
  • Team Factors
  • Davenham Asset Finance
  • IGF Invoice Finance
  • Lloyds Bank Commercial Finance
  • MaxCap
  • Sonovate
  • InvoCap
  • Investec
  • Roma Finance
  • Davenham Trade Finance
  • Haydock Finance Ltd
  • Praetura Invoice Finance
  • Optimum Finance
  • Woodsford Tradebridge
  • Clear Factor
  • 4Syte
  • Close Brothers Invoice Finance
  • Metro Bank SME Finance
  • Castlebridge
  • Giant
  • Blazehill Capital
  • Ultimate Finance Group
  • Partnership Invoice Finance
  • Santander Corporate & Commercial
  • Barclays
  • Time Finance
  • ABN AMRO Commercial Finance
  • Leumi ABL
  • Skipton Business Finance
  • Accelerated Payments

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We are a credit broker and not a lender and offer credit facilities from a panel of lenders