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Funding Shortfall for G20 SMEs

Research by Ernst and Young has revealed the extent to which SMEs are relied upon to provide jobs, but are neglected in terms of funding – not just in the UK, but across all the G20 countries.

Over 1,000 entrepreneurs and SMEs were interviewed, with nearly two out of three saying that they found access to funding tricky in their countries. This is despite various G20 governments taking action to tackle the accessibility of bank lending.

Access to funding is continuing to be a problem for the growth, creation and ongoing potential of many SMEs. This is particularly important for some of the most innovative businesses. These businesses are the ones that will create new jobs in hard economic times, but they are still only seeing a tiny proportion of investment.

Investment in SMEs across the G20 is estimated at US$714bn, which equates to only 6% in the overall investment figures of US$11,507bn across all forms of investment. The biggest investment comes from bank lending, estimated at US$569bn. This trend remains across many of the G20 countries.

Maria Pinelli, the Global Vice Chair for Strategic Growth Markets at Ernst and Young, commented; “While SME’s create 50% of employment in most G20 countries, they only receive 6% of investment. Clearly, there is an imbalance here. How many more jobs could be created with more support? With just a few changes, by 2020 the financial system could support double to number of SMEs it does today.”

In the UK specifically, this is especially pertinent given the high unemployment rates that are currently in evidence. The government is aware of this and has already championed SMEs as the lifeblood of the economy, but that hasn’t hugely impacted the availability of bank funding for small and medium businesses.

Looking into alternative means of finance is a good way to bypass the unwillingness of banks to lend. This can inject some much needed cash flow into your business, helping you to get funds when you need them. Peer to peer lending, crowding sourcing and asset based lending are all ways to get hold of the financing you need. Invoice finance can also release cash flow, with the added benefit that your business won’t be taking on extra debt.




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