A lack of trust in the banks could be stopping some SMEs from achieving their potential, according to a survey published today.
The latest SME Finance Monitor from research company BDRC indicates that the economic recovery remains on course.
Figures for the first quarter of 2014, which have been released by BDRC, show that economic conditions continue to be less of a barrier to business growth.
Only 20 per cent of small business owners have cited the economic climate as a significant barrier to growth, a fall of 12 per cent when compared with the same quarter last year.
However, the report highlights the continuing slide in the number of small businesses turning to loans and overdrafts as a way to fund growth. A third of firms surveyed reported using external finance, while 30 per cent of businesses questioned had looked to inject their own funds into their business in the past 12 months.
Phil Orford, chief executive of the Forum of Private Business, said: “The figures from the survey show a continued fall in the number of businesses that see the economy as a barrier to investment, but a continued decline in small firms looking to outside sources for future funding.
“In 2011, 51 per cent of small businesses used external finance and 30 per cent were seen as ‘permanent non-borrowers’. Today’s figures show a clear reversal in the number of businesses looking to the banks and other external sources moving forward.
“It is vital that small businesses are able to take the opportunities that are presented to them, and external finance should have a significant role.”