Many small firms in the UK face challenges when it comes to finding and applying for funding, according to a report published by the Federation of Small Businesses (FSB)
The FSB’s report found that ‘widespread uncertainty’ exists among small businesses in regard to where to get information on the types of finance available to them.
Two-thirds of small firms stated that they are planning to make some form of investment in their business by 2024. However, only 49% said that they had information on the different types of financing options available to them.
The success rates of finance applications have also dropped since the Covid loans era, with under half (46%) of applications successful in Q3 2022, compared with a pre-Covid success rate of nearly two in three (64%). The smaller a business is, the less likely its request for finance is to be approved, the research found.
FSB urges government action on finance
The FSB has urged the government to ‘take action to improve the financing landscape for small businesses’. It recommends introducing a VAT-based capital investment incentive, encouraging the use of the Bank Referral Scheme, and expanding the Start-Up Loans Scheme from 11,000 to 15,000 loans per year.
Martin McTague, National Chair of the FSB, commented:
‘Small businesses that cannot access finance are small businesses that are cut off from opportunities to grow and expand. It’s that simple.
‘As a country, we cannot afford to have a repeat of the post-credit crunch scenario, where the dreams of thousands of entrepreneurs and business owners were crushed by a withdrawal of finance options, leaving them unable to continue and deepening the UK’s economic woes.
‘Many small firms now are in a highly precarious position, carrying debts from the pandemic, with the Bank of England raising the base rate, and with funding options getting scarcer and costlier.’
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The FSB Report “Credit Where Credit’s Due” can be found here: FSB website