Small businesses that commit to investing in their companies show demonstrable grow. However, many are still holding back from investing in new innovations, according to a new report.
Research by Think Business Loans found that 41% of SME’s are unsure of their ability to invest in their business over the next 12 months. What’s more, the value of business loans to SME’s has fallen by 56%, meaning SME’s are being left behind by the big banks.
Despite making up 98% of the private sector and contributing £1.9 trillion to the UK’s economy, SME lending accounts for only 2% of banks’ balance sheets. As a result, 4 out of 10 businesses are unsure of their ability to invest in their businesses, with many others now are now SMEs searching for innovative funding sources to help increase their growth.
Jamie Stewart, CEO of the commercial finance brokerage, described the banking system as “ripe for disruption”
The lack of funding from big banks is causing SME’s to struggle like never before. Data obtained by Think Business Loans reveals that small businesses are unable to invest in growth-boosting technology. Of the 2010 businesses surveyed, 22% of SME’s revealed that they are unable to afford to use card readers.
With the lack of available funding from banks, SME’s are foregoing the basic technology required to bring them up to speed with the 21st century. But the lack of innovative technology isn’t the only thing holding small businesses back. 66% of SMEs are yet to harness the potential of online advertising due to lack of funding.
The lack of funding and support from banks is considered a major obstacle from SME’s. With 36% of UK SME’s finding it difficult to budget for the year ahead, businesses are feeling the pressure of challenging market conditions, political uncertainty and the knock-on effects on forward-planning.
As a result, many alternative lenders have sprung in the last few years with the aim of disrupting the stagnant finance industry and revolutionising the way SME’s obtain finance.
Jamie said “not only are banks under serving and closing their doors, the comparative propositions on the market are becoming more and more agile and attractive”
The brokerage aims to encourage more SME’s to obtain the finance they need to help them succeed in the business world, through their innovative matching technology. iFunds works with businesses in mind, helping UK SME’s search and compare lenders in just three minutes.
Author of the technology and head of product, Leekim Chang tells The Fintech Times “our technology has helped fund many small businesses, once turned away by the banks, who have gone on to grow exponentially over the next few years”.
Chang explains iFunds “simplifies hundreds of variables with a 90% accuracy rate”, with the hopes that combining technology with the stagnating industry will help close the gap and assist SME’s in getting the funding they need.