SME Attitudes to Borrowing


The purpose of this research is to gather insights from SMEs around their attitudes to borrowing in the UK today. Over 500 SME's were surveyed for this research. The data is split by sector, region, life cycle, company size and age of responder.  If you are an owner of a manufacturing business in Yorkshire, you will be able to see how other similar companies to your own responded for example.

Key Takeaways

  • Overall 67.13% of the companies surveyed have sought out external sources of financing in the past 12 months, although 35.06% of them will try to avoid borrowing money if at all possible.
  • The main reason for not wanting to borrow money is that companies do not want to owe additional money (53.59%), even though 71.71% have had to invest their own personal funds.

London is the region

... most open to trying a variety of external sources of income and 65.04% of London companies trust traditional lenders. Northern Ireland companies are the least likely to apply for external funding and over half of them (55.56%) have not sought any external funding in the last 12 months.

The business service sector

...  is less likely to want/need finance than the recruitment agency sector. For example, when asked if they had sought any external finance in the past 12 months only 51.95% business service companies had, compared to 90% of recruitment agency companies.

Start-up companies

... are more likely to need/want external finance assistance, and only 15.09% of them have not sought financial help in the last 12 months.

The age of the business owner

... does seem to impact how each company responded. Examples include that the younger age groups are more likely to trust traditional lenders than the older age group and the older ages are less likely to think that Brexit will definitely affect they ability to access external finance (14.58%).

Companies with less than

... 10 employees are generally less keen to borrow and explore new methods of external finance than the larger companies. For example, 44.76% of the smallest companies try to avoid borrowing money, whereas only 17.65% of companies with between 250 and 500 employees try to avoid borrowing money. This is likely because smaller companies want to try to be self-sufficient.

What type(s) of external finance has your business sought in the last 12 months?

32.87% of the companies surveyed have not sought any external finance in the last 12 months, this is particularly true for companies in the business sector (48.05%) and companies from Northern Ireland (55.56%). Of the types of external finance that companies have used, a bank loan is the most popular and 37.25% of companies sought this type of external funding in the last 12 months.

SMEs attitudes to borrowing - types of finance

SMEs attitudes to borrowing - types of finance

What personal funds did you invest into your business?

Personal savings is the type of personal funds most often invested into the businesses surveyed (80.28%), and 100% of companies from the North East, and 92.59% from Yorkshire and the Humberside, invested their own personal savings.

SMEs attitudes to borrowing - personal finance

SMEs attitudes to borrowing - personal finance

To what extent do you trust traditional lenders, such as banks?

Only 15.54% of the companies surveyed completely trust traditional lenders, however, 28.46% of companies in London trust them and 28.30% of new start-up businesses completely trust them. None of the companies in the North East or Northern Ireland completely trust traditional lenders.

SMEs attitudes to borrowing - trusting traditonal lenders

SMEs attitudes to borrowing - trusting traditonal lenders

To view all of the research broken down by sector, region and life stage of the business, please view the full report and guide here

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SME Attitudes to Borrowing

Read the full report here, how SMEs use personal funds to inject cash in to their business, and we explore the attitudes to traditional lenders amongst SME's.

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