Hopes are high for an economic recovery later in 2012

Indications of an economic recovery later this year have been reinforced by findings that medium size businesses are also anticipating steady growth. SME’s are often viewed as a benchmark for the overall health of the economy so any factors that influence small business are extremely important.

The SME Finance Monitor, a survey run by BDRC Continental shows that positive expectations are growing with nearly 50% of SMEs expecting growth in the coming months. Over 20,000 firms responded to the survey and over a third claims the economy is the number one barrier to efficient business operations.

In further results from the survey it was found that over 15% of SMEs are anticipating applying for business loans, up slightly on the last quarter with over half expecting a favourable response from their bank managers. Another 25% of respondents fell into the category of companies that “might be” applying for finance, but would rather not do so; an increase of 5%.

In overall results for the period covered by the survey fewer than 60% of applications for new financing were successful. Nearly 90% of rollover requests were approved, an indication banks are continuing a conservative attitude in their lending practices.

BDRC director Shiona Davies stresses that while applications for ongoing financing are generally successful, new funding requests are still difficult to get approval for. Davies goes on to say that the new research gives SMEs better information about what banks are looking for when it comes to approving new loans.

One of the suggestions by BDRC Continental is that businesses are able to demonstrate clear and sustainable financial literacy in their funding applications, and show that they understand how their company is run. Further recommendations include consulting with professional advisors whenever necessary and using their expertise when drawing up funding applications.