The largest and most frequent study of its kind in the UK, research findings have been gathered across 25 waves of interviews since 2011 and are based on more than 120,000 interviews with SMEs.
The Q2 2017 data published today provides a further update on the period after the EU referendum campaign and the recent General Election. Overall much of the data is stable with demand for finance remaining limited as SMEs, especially the smaller ones, prefer to self-fund.
Demand for finance remains muted. Many SMEs, especially the smaller ones, prefer to rely on their own resources, even when a business opportunity presents itself, and more hold credit balances that reduce their need for finance.
Some of this low demand is due to attitudes towards finance. A majority of SMEs agreed that their plans for the business were based on what they could afford themselves (81% agreed YEQ2 2017) and that they would accept a slower rate of growth rather than borrowing to grow faster (70% agreed YEQ2 2017), both little changed over time.Asked specifically about how they would fund a new business opportunity, 41% of SMEs would be likely to talk to their bank. Almost as many, 38%, would look to self-fund the project, either from company resources or with funds from the owner/directors. 18% would be unlikely to take up the opportunity because of a fear of being in debt and the associated risks. The largest SMEs, who are more likely to be using finance, would be more likely to approach their bank for finance (61%) and had fewer concerns about taking on debt. They are also generally more willing to borrow to grow.
Shiona Davies, Director at BDRC, commented:
“There have been no dramatic market changes since the referendum. However there are signs in the first half of 2017 that larger SMEs, whilst concerned about the economic climate and political uncertainty, are looking to grow and to use finance more than before.”
“For the smallest SMEs, the picture is slightly different. Like their larger peers, many of them have made a profit and more of them are holding £10,000 or more in credit balances. However these sole traders have become less likely to be planning to grow over time and less willing to borrow to grow. They would be more likely to either self-fund a new business opportunity or turn it down because of concerns over getting into debt”.
