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Most SMEs struggle to gain capital to grow

Andrew Johnson, financial Director - PowWowNow

A staggering number of UK SMEs – 8 out of 10 – are struggling to acquire the capital needed to scale, pointing to trouble ahead for business as Brexit looms.

New research, commissioned by conference call provider PowWowNow, has revealed the attitudes and barriers to growth for SME business leaders across Europe.

Just under three quarters (73%) of UK SMEs are seeking funding for growth, but for a third (32.5%), the biggest barrier to accessing much needed capital is uncertainty surrounding Brexit. The lack of options for finance comes a close second, with a quarter of small businesses (23%) citing it as a main barrier to growth; followed by a lack of knowledge about how to access funding (21%).

The research also revealed our European neighbours find it easier to access funding needed for growth; less than half of French SMEs (48%) and only 44 percent of German SMEs say they have found it a challenge to gain finance.

SMEs in the retail, catering and leisure industries are finding it the most challenging to access the funding needed for growth (94%). This is closely followed by the education industry, with 95 percent of SME leaders deeming it hard to gain the finance required for scaling.

In contrast, only half of SMEs in the legal sector find it difficult to access funding, and just 40 percent of businesses in HR.

German businesses have a starkly different finance experience when it comes to business size— 60 percent of SMEs with over £500m turnover find it hard to access funding. Meanwhile, at the opposite end of the scale, startups with under £9.99 million turnover find it easier to gain the funding they seek; with just under a third (32%) deeming access to finance a pain point when scaling.

That many SMEs are struggling to acquire the capital needed to scale is unsurprising thanks to years of uncertainty around Brexit.  Forecasts have even shown Britain risks falling behind competitors, with businesses on track to cut investments this year.

However, the research also shows UK businesses are demonstrating a keen appetite for growth. If the economy is to come out stronger in the aftermath of Brexit, we must ensure SMEs have easier access to the finance they need to scale. The UK has a long-standing reputation for innovation, and we have regularly been one of the best places in the world to start and grow a business- long may that continue.

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