BDRC Continental says SME confidence is poor

The current signs seem to indicate that small businesses in the UK are doing as well as could be expected, but that is not to say that they are experiencing a significant upsurge in vitality.  A report commissioned by the Business Finance Taskforce for the second quarterly SME Finance Monitor, published 17th November by BDRC Continental concluded that lack of confidence is the biggest impediment.

SME Finance Monitor investigates the amount of financing available to small and medium businesses; it is the most frequent and comprehensive study of its kind in the UK.  This report was based on more than 10,000 telephone interviews with owners of UK businesses that had a turnover of no more than £25 million between February and September of 2011.

The report identifies different segments of the SMEs (small and medium enterprises), breaking them down into groups it refers to as “happy non-seekers” and “would-be seekers”.  The first group included about 3.37 million or 74% of SMEs that reported they did not feel the need to look for new finance in the past year.  In the overall SME market, about a third, or 1.5 million of business owners do not currently use external finance and don’t plan to anytime in the immediate future.

The second group consisted of around 12 percent of the SMEs interviewed, down by only one percent from the previous quarter.  Those were the ones who wanted to borrow money but did not apply for it for one reason or another, with the most common reason being the uncertain economy, and the second being an assumption of refusal by lenders.

In other findings, the report identified about one percent of SMEs that had been unsuccessful when applying for a loan, and two percent when applying for an overdraft.  Of the ones who did apply for overdraft  and were refused, more than half were applying for the first time.  In the case of new loans, about 31% of those applying were unsuccessful, and of that group 41% were first-time applicants.