Business growth all comes down to having suitable finance in place, and research by Aldermore Bank has revealed just how UK SMEs are going about it. The study looked at the financial plans of 300 companies across the UK and there are several notable statistics we can glean from it, the first of which being that 38% relied on cash reserves to fund their future ambitions. Of the remainder, 12% said their plans would be funded by a bank loan, 10% through hire purchase or leasing, 7% through services such as invoice discounting or factoring and just 4% would opt for funding via a commercial mortgage.
These figures show just how much the financial landscape has changed over the last few years. Whereas businesses would have once relied on the likes of loans, mortgages and overdrafts to fund their future growth many are now choosing alternatives, with these findings backing up previous research conducted by International Trade Monitor—again, this survey found that small businesses have less faith in traditional sources of lending with many turning to alternative solutions. More than a fifth of those surveyed went down the non-traditional route, with 44% of that funding coming from asset-based finance, 31% from factoring and 25% from personal savings—it’s all about diversifying, with businesses no longer willing to keep all their eggs in one basket but rather looking for a wider range of funding solutions instead.
This all paints a new picture of SME finance in the UK, with the likes of factoring having a much bigger role than it once did. It can be the key to business success, being a great way to help fund future growth by freeing up cash flow and providing a valuable cash injection, so if you want to see why so many companies choose to go down this route just get in touch and see for yourself.