SMEs feel confident but frustrated by lack of financial backing

SME owners are feeling more optimistic and are keen to invest in growth but are frustrated by the mix of financial options open to them, according to a survey from ACCA UK (the Association of Chartered Certified Accountants) and The Corporate Finance Network (CFN)

According to the ACCA’s SME businesses tracker, a total of 89% of owners have reported that they are trading at or above the expected level in July, which is an increase of 29% from last month’s figure.

SME’s have also shown a surge in confidence over the last few weeks with almost 90% expecting to return to pre-Covid levels within two years and 28% had brought forward plans to obtain additional finance to invest in their business.

However this positivity is shadowed by financial worries, 67% of business leaders have found it more difficult to obtain even an overdraft from their bank in recent weeks whilst one-third have also struggled to finance their growth for the next year with other traditional options, including mortgages or finance leases.

Around one-third of the 8,863 businesses who participated in the tracker, have forecast their financial requirements for the next 12 months, but they are having problems accessing commercial finance facilities, following the closure of many of the government-backed support schemes and the slow rollout of the Recovery Loan Scheme.

Kirsty McGregor, founder of The Corporate Finance Network, said: ‘It’s encouraging that businesses are getting back to good levels of trading and want to invest to grow. But it’s important to get the right mix of finance to do this in a sustainable way for the long term.

‘We can see that increasing anxiety is leading businesses to take a short-term approach and traditional sources of funding are drying up, particularly for SMEs who have already taken government-backed loans.

‘We continue to hear that the uptake of recovery loans is very slow and few of the accredited lenders are making them available. The communications around this scheme have been poor and they seem to have made very little impact since they launched in April.’

The businesses tracker also found that there has been a spike in mental health problems as owners are frustrated in their efforts to take advantage of reopening, with 57% reporting that they are feeling more stressed and anxious, which is a jump of 20% from last month’s figure. Almost 6% are feeling unable to cope and 12% saying they are not sleeping.

Claire Bennison, head of ACCA UK, said: ‘Economic indicators are reporting a strong rebound in the UK economy and our members are keen to get back to full throttle business as trade recovers.

‘However, they are struggling to find the right mix of financial support to guide them through the next stage of the pandemic. This is frustrating for business owners and is taking a toll on their mental health.

‘We would appeal to the financial services sector to support small businesses at this crucial time, to provide them with the right financial backing for them to get back to growth.’


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