Three fifths of start-ups rejected for bank loans

15/09/2014 / Comments 0

Three fifths of start ups rejected for bank loans

An overwhelming three fifths of start-ups were rejected for traditional forms of funding in the last two years, according to new figures.

The research, conducted by UK business angel network, Angels Den, showed that 59% of British entrepreneurs that have launched small businesses in the last two years had tried and failed to successfully obtain financial investment in the form of traditional bank loans.

The most common reasons the entrepreneurs gave for rejection were unrealistic financial predictions (32%), and lack of business experience (28%). Other reasons banks had declined start-ups for funding included their age (16%) and poor credit rating (9%).

Unable to access loans, more than half (58%) of entrepreneurs surveyed opted to use a combination of savings and money borrowed from family and friends to get their venture up and running.

Bill Morrow, co-founder and director of Angels Den, said: “Unfortunately, it is all too often the case these days that promising start-ups with an excellent service or product to promote fall at the last hurdle, whilst trying to secure traditional investment.”

But while traditional lending has been increasingly difficult to obtain, asset based lending has reached record highs.

The three months to the end of June 2014 was the biggest ever quarter for asset based finance, with a record £18.9 billion of funding provided to businesses, according to the Asset Based Finance Association (ABFA), the body representing the asset based finance industry.

With 82% of its clients turning over less than £5 million, this shows that flexible funding options are readily available for start ups and small businesses without having to turn to their family and friends.

Download our ultimate guide to business finance for start-ups to explore popular funding solutions for new businesses.


No comments yet - be the first!

Some of the funders we work with

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

Authorised and regulated by the Financial Conduct Authority (FCA number 730445)
We are a credit broker and not a lender and offer credit facilities from a panel of lenders

Our website uses cookies. For more information about managing cookies, visit our Privacy and Cookie Policy. Continue