Small firms miss out on credit

A lack of funding is putting Scottish small and medium-sized enterprises (SMEs) at risk, according to research from merchant bankers Close Brothers Group.

It found 21% of firms had been turned down for finance or credit.

Over-reliance on overdrafts was still a concern, while 31% of Scottish SMEs had used personal savings to grow their business – the highest proportion in the UK

A lack of access to the right funding means many firms are resorting to funding options that risk restricting their growth, according to the Banking on Growth: Closing the SME Funding Gap report.

Nearly three in 10 ( 28%) Scottish SMEs said they had used overdrafts togrowtheir business, with 17% resorting to using credit cards.

Close Brothers said: “Given there are more than 5.4million SMEs in the UK, providing over 15million jobs, a lack of access to appropriate funding represents a significant barrier to longterm economic growth.

“SMEs in Scotland are often overly reliant on other means of funding which poses a risk to their future growth.”

Adrian Sainsbury of Close Brothers’ banking division added: “SMEs have not always found it easy to secure the right funding to sustain or grow their businesses. Given the huge contribution these companies make to the labour market, failure to support their growth is a risk to the UK economy.

“It’s vital SMEs receive specialised advice and products to suit their circumstances and provide the right platform for growth. One size does not fit all. Education is also important. Without the right support, many SMEs relyonunstable or costly funding to expand.”