Lease vs finance? The question is not being asked by half of SMEs, according to Wesleyan.
Research by the British Chambers of Commerce (BCC) and finance provider Wesleyan Bank has shown that over half of UK businesses have not asked themselves the lease vs finance question over the past year.
In the survey of over 1,073 firms from across the UK, almost two-thirds (63%) of small firms (1-9 employees) did not seek finance, compared just over a third (39%) of larger firms (50 or more employees).
Conventional sources of finance remain the most attained; overdrafts (18%), business loans (16%) and asset finance (9%). Less than 4% sought crowdfunding, peer-to-peer or angel finance.
Nearly half (49%) of those that sought finance did so because of cash flow. Two-fifths of respondents describe their cash flow over the last 12 months as ‘weak’.
The research also found that businesses planning on investing over the next year are focusing on incremental investments rather than big expansions. Those planning on investing are primarily looking at putting money into operational initiatives such as marketing and advertising (49%), staff training (48%) and IT and data security (45%).
Suren Thiru, head of Economics at the BCC, said: “Accessing finance remains crucial to the lifeblood of a business, yet a decade on from the financial crisis these results suggest that we have moved from a credit crunch to credit apathy where a lack of demand, rather than supply of finance is now the overriding issue.
“The government also needs to do more to kick-start business investment. Firms need relief from the heavy burden of upfront costs which sap funds that could otherwise be spent on big capital expansions. Give companies the financial room to grow and clarity on Brexit and we’d see more long-term investment coming through.”
Paul Slapa, head of direct sales at Wesleyan Bank, said: “Understandably, some businesses are cautious about seeking finance given the fluctuating appetite of high-street lenders to support them. However, in reality there are now more alternative funding sources available from specialist providers than ever before to assist firms to grow so it’s worth exploring all potential options to make an informed decision.”