South East businesses show a strong appetite for finance

DEMAND for finance is strong among smaller businesses in the South East and expected to increase at all development stages, according to an Ipsos MORI survey commissioned by the British Business Bank.

The survey of small business finance intermediaries in the South East of England, including accountants, lawyers and small business finance advisers, looks at demand, supply of finance and how it is working for smaller businesses in the region.

Findings highlight a strong appetite for finance among businesses that, despite having struggled with reduced cashflow throughout the Covid-19 pandemic, are focussing efforts on recovery and growth.

In the South East, intermediaries reported strong demand for external finance, with two-fifths (41 per cent) saying demand exceeds supply.

It is believed the next 12 to 18 months will be crucial for smaller businesses in the South East, with most intermediaries surveyed expecting smaller businesses to require additional debt finance (85 per cent) due to the Covid-19 pandemic, and around two-thirds said this about alternative finance (69 per cent) and growth stage equity (65 per cent).

Respondents in the South East were positive about the finance ecosystem for smaller businesses consolidating success, with 73 per cent saying it was adequate.

Opinion differed when it came to the adequacy of the finance ecosystem to support smaller businesses at other development stages, with 44 per cent saying it was adequate to support start-ups.

Alongside the strong demand for finance, intermediaries in the South East said a lack of awareness of finance options available (75 per cent), access to the supply of finance (58 per cent) and an aversion to taking on finance (50 per cent) among smaller businesses are the main barriers to demand for finance in the region since March 2020, aside from the Covid-19 pandemic.

These findings were in line with the results across the UK.

With most respondents expecting smaller businesses to require additional finance, 85 per cent also believed that there were gaps in the supply of finance for smaller businesses in their region regardless of their stage of development.

Respondents who thought there were gaps in the finance supply were most likely to identify gaps in early-stage equity (63 per cent), debt finance (59 per cent) and growth stage equity (51 per cent).

British Business Bank UK network director, South and East of England, Steve Conibear, said: “It is encouraging to see the demand for finance is strong among smaller businesses in the South East despite the challenges of the pandemic. The increasing demand for finance is a positive outcome, as businesses focus on recovery, supporting both the South East’s and the UK’s economic recovery.

“At the British Business Bank, we remain committed to working alongside our partners to increase awareness of the equity and alternative finance options available to smaller businesses and aide them with the knowledge and support in making the right financial decisions for the future.”

To find out more about how the British Business Bank can help your business visit https://www.british-business-bank.co.uk/finance-hub/