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Family and friends help fund one in five SMEs

11/02/2014 / Comments 0

Family and friends help fund one in five SMEs

With traditional business finance in increasingly short supply, one in five British businesses are being driven to seek loans from family and friends in search of a cash flow boost, according to new research.

The latest SME Trends Index conducted by commercial finance broker Hilton-Baird Financial Solutions found that 19 per cent of SMEs were using money borrowed from their family and friends to fund their activity. This represented an annual increase of eight per cent and underlines the challenges that many continue to face.

Almost one in four of those that do stated that an inability to access funding was their primary concern for the coming six months, and, when reviewing their existing finance arrangements, 56 per cent are most looking for additional funding.

Business lending has dominated the news agenda for many months now and, despite a number of government initiatives, traditional lending to small businesses through overdrafts and bank loans continues to decline.

Although many look to friends and family, others are turning to less traditional lending solutions for a financial boost. Hilton-Baird’s research also found that the use of asset finance and invoice finance both increased on an annual basis amongst SMEs, and it was these businesses who were performing best as a result.

While 48 per cent of the business owners and finance directors questioned reported a rise in turnover during the preceding six months, this figure was as high as 56 per cent for users of both invoice and asset finance solutions.

Evette Orams, Managing Director of Hilton-Baird Financial Solutions, said: “The downward trend of traditional business lending can be seen both as a negative and positive. On the one hand many businesses are being starved of vital funding, but on the other it is driving businesses to look at other, arguably more suitable, funding methods.

“Although it is a concern that one in five businesses have borrowed from family and friends, it is encouraging to note that the use of invoice finance and asset finance has increased. These solutions can be extremely beneficial, often more so than a simple overdraft or bank loan, as the funding that can be accessed grows in line with the business and can include features to support and protect the business as it grows.

“As more businesses start to recognise these benefits, this trend will surely continue and 2014 could be a big year for the asset based finance industry, and for those businesses in search of a cash flow boost.”

-Ends-

For further enquiries, please contact Jamie Weeden at Hilton-Baird Group on 02380 706637 or email jamie.weeden@hiltonbaird.co.uk.

Note to editors:

Hilton-Baird’s latest research was undertaken among 296 businesses across a wide variety of business sectors, providing a representative sample of the UK’s SMEs. The research was conducted in September 2013, with the results providing a snapshot of current business sentiment and a fascinating opportunity to establish a graphic picture of business trends.

Evette Orams is Managing Director of Hilton-Baird Financial Solutions, which is part of the Hilton-Baird Group of companies. As an independent invoice finance broker, Hilton-Baird’s aim is to clearly identify their clients’ funding requirements and introduce them to the relevant funding solution. The Group prides itself on maintaining excellent relationships with a broad spectrum of lenders and constantly delivering positive and innovative financial solutions.

The business’s affiliations to the leading financial industrial bodies, the Asset Based Finance Association (ABFA), the Finance and Leasing Association (FLA) and the National Association of Commercial Finance Brokers (NACFB), ensures it maintains the highest level of standards for its clients.

Hilton-Baird Financial Solutions helps businesses of all sizes to fulfil their potential by introducing the most suitable cash flow solutions. Read recent success stories here.

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Funders we work with

  • Innovation Finance
  • Factor 21
  • Aldermore Invoice Finance
  • Bibby Financial Services
  • Barclays
  • Market Invoice
  • Davenham Trade Finance
  • PNC Business Credit
  • GapCap Cashflow Finance
  • Calverton Finance
  • Outsauce
  • Asset Advantage
  • Amicus Commercial Finance
  • Assetz Capital
  • Creative Capital
  • Henry Howard Cashflow Finance
  • Trade Finance Partners
  • Lloyds Bank Commercial Finance
  • Invoice Cycle
  • iwoca
  • Skipton Business Finance
  • Team Factors
  • Hitachi Capital Invoice Finance
  • Metro Bank SME Finance
  • Woodsford Tradebridge
  • Ultimate Finance Group
  • Nucleus Commercial Finance
  • Regency Factors
  • Everline
  • Shawbrook Business Credit
  • 1pm
  • ABN AMRO Commercial Finance
  • Working Capital Partners
  • Pulse Cashflow Finance
  • Royal Bank of Scotland
  • IGF Invoice Finance
  • Davenham Asset Finance
  • Partnership Invoice Finance
  • Santander Corporate & Commercial
  • Platform Black
  • Ashley Commercial Finance
  • Close Brothers Invoice Finance
  • Positive Cashflow Finance
  • Secure Trust Bank
  • Roma Finance
  • Catalyst Finance
  • Leumi ABL

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