SMEs 'seek funds from family'
Jul 09 2009
The number of small and medium-sized enterprise (SME) owners who would consider borrowing money from friends or family has doubled in the past year, a new study suggests.
Research carried out by the invoice financing arm of investment bank Close Brothers shows that 20 per cent of owners would think about approaching their friends or families for a loan if their access to bank funding was cut. This is compared to just ten per cent last year.
In addition, the poll shows one-third of SME owners would turn to a personal loan to fund their company and seven per cent would spend on their own credit card.
David Thomson, chief executive officer of Close Invoice Finance, says the findings show small businesses are feeling the increasing pressure of funding drying up from conventional sources.
'This has forced more and more SME owner-managers to pursue risky short-term strategies to secure cash flow and in the process put themselves and those closest to them under intense pressure,' he comments.
Last month, the Bank of England claimed that lending to businesses declined by the largest amount in nine years in May, falling from £9 billion in April to £7.9 billion.
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