Funding challenges ahead for UK small firms

Small businesses are increasingly concerned about the lack of funding options available to them in the run-up to Brexit.

A new survey of 500 UK small businesses by Hiscox has found that over a third (35%) are worried about the lack of funding options. And as the UK moves towards Brexit, the poll also shows that 38% of UK SMEs currently rely on EU funding.

However, it seems many business owners are unaware of the wide range of funding options on offer. Overall, the findings show that one in five businesses is still unaware of the variety of funding options available to small firms and start-ups.

Over one third of those polled (36%) said a lack of choice was the most common single challenge they faced when looking for funding; 28% cited a lack of eligibility as the reason holding them back from obtaining finance.

Despite the emergence of new finance options for start-ups including crowdfunding and peer-to-peer lending, the survey results show that most small businesses still rely predominantly on banks for finance - three-quarters of those polled have used bank loans for funding in the past five years. Other popular funding options are EU funding and equity funding -both received by 38% of businesses in the past five years.

The research also confirms that economic uncertainty has had a significant effect on small business growth - 31% of those polled said it had been the biggest factor impacting their growth in the past five years. For almost a fifth of respondents, economic uncertainty has been a bigger challenge than competition within their own sector. Another key cause for concern is the availability of skilled workers, with 10% of businesses facing obstructions to their growth due to a lack of skilled personnel.

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