SMEs in the South West are struggling to find adequate funding to invest and boost their productivity, according to research by Close Brothers Group.
Just 32% of SMEs in the South West have been able to access capital through their chosen funding route, compared to the UK average of 41%.
However, even those able to secure some form of funding have faced challenges.
Of those SMEs in the South West who did receive funding – whether via banks, personal loans or specialist lenders – 39% felt that it wasn’t enough for their investment plans.
A further 17% felt that the type of funding they had used was too expensive.
Access to sufficient capital is vital for businesses looking to grow and expand. Funding is needed for staff training, investing in new technologies, expanding product lines or renovating premises; all of which can help increase productivity levels, and subsequently a company’s bottom line.
However, many SMEs in the South West are unsure how to deploy capital they have borrowed.
34% of those who secured finance were uncertain how best to use the funding they received.
This would indicate many require additional support, ensuring the products and finance they are receiving from their lender is aligned to their business’ goals and strategy.
A lack of specialist lending support is a contributing factor in SMEs’ funding issues in the UK – more so than abroad.
34% of SMEs in the South West said that the funding they had received was not suited to their individual business or sector. This was higher than the percentage of the UK average of 20%.
Adrian Sainsbury, Banking Division Managing Director, Close Brothers comments: “Low productivity hinders economic growth and improving productivity is vital, particularly as the UK prepares to leave the EU. Given their importance to the economy, SMEs will be central to potential productivity gains.
“SMEs need access to the right finance and support to invest in training staff or adopting new technologies so increasing awareness of financial options is crucial. Bespoke funding solutions which align to specific needs and growth plans are always preferable to a one-size-fits-all approach.”