Hundreds of SMEs may be missing out on new sources of funding due to a lack of awareness and understanding, according to a new study by Aviva.
The research conducted by the insurer revealed that more than one third (36 per cent) of SMEs – equal to roughly 1.8 million UK businesses – plan to invest during the second half of 2014, but found that in many cases they were simply unaware of the range of finance options available to them, particularly when it comes to alternative finances, such as crowd-sourcing and peer-to-peer funding.
The survey conducted among 1,500 UK SMEs revealed 33 per cent of SMEs don’t understand what alternative finance is or know how to take it out, while a similar amount (29 per cent) also admitted to being unaware of it as a funding option.
Robert Ledger, head of small business at Aviva, said: “High street banks will always be an important port of call for many SMEs – whether they are at the beginning of setting up a new business, or seeking investment to expand an existing one.
“However, with the rise of alternative finance options and increasing media focus on schemes such as crowdfunding and peer-to-peer lending, it’s important for small businesses to understand that there are a variety of options open to them outside of traditional finance methods, designed to suit differing business needs.”
The study also found that there was mixed feelings from SMEs about the level of support and advice available to them from the government, which has led the insurer to join in calls for more support for the UK’s small businesses.
This latest research is backed by the Bank of England’s latest data that showed bank’s Funding for Lending Schemes, designed to help SME’s, where down by £719 million in the first quarter of this year.