Younger SMEs are more likely to consider a diverse range of options when seeking finance or information to expand their business, including turning to friends and family, compared with older companies, the Business Banking Insight (BBI) has found.
An ICM poll of 5,000 SMEs across the UK found that 42% of businesses formed after 2010 would consider approaching acquaintances and relations for business investment and 64% of these businesses would turn to their friends and family for guidance around finance. This compares to just 22% of businesses created pre-2000 who would think about using this type of finance and 45% who would ask their nearest and dearest for information.
In addition, over one third (36%) of companies created post-2010 would consider peer-to-peer lending if they wanted to expand their business, compared with just 18% of firms created before 2000.
Newer businesses are also more open when it comes to considering using different sources of guidance when financing their companies. While just 29% of those created before 2000 would use a mentor, half (52%) of SMEs formed in the past five years would use this form of advice.
A similar amount of newer SMEs would seek out financial advice sites (56%) for information, compared with just 32% of those founded pre-2000.
Economic Secretary to the Treasury Harriett Baldwin said:
“Britain’s small businesses are the backbone of our economy, which is why a key part of our long term plan is making sure they can access the finance they need to grow, create jobs and succeed. Data collected as part of the Business Banking Insight survey shows that our plan is working, and that our smallest businesses are increasingly considering alternative finance providers.”
Mike Cherry, Federation of Small Businesses Policy Director and spokesperson for the BBI, said: “The BBI can help companies of all sizes get the right finance. Accessing the best product for your business is critical to growth and future investment. The BBI should be part of that journey to allow you to see what other businesses like yours have found useful and which providers might be right for your needs.”
John Longworth, Director General of the British Chambers of Commerce and spokesperson for the BBI, said: “The divide between older and newer companies in attitudes to seeking business finance and guidance highlights a change in approach by businesses’ to driving growth. The finance needed to drive growth can and should be tailored to the specific needs of each business, so it’s vital that traditional lenders and advisers adapt to meet the changing demands of SMEs.”
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