Small businesses are more upbeat about the prospects of growing their business than last year, research finds.

Small businesses are more upbeat about the prospects of growing their business now than last year, research finds. 


Almost half (47 per cent) of SMEs state an objective to grow in the next 12 months, up from 44 per cent in Q1-2 2011, according to the latest quarterly SME Finance Monitor published by BDRC Continental.

The uplift is due to larger numbers of smaller businesses that plan to grow (increased from 41 per cent to 46 per cent).

Two thirds (65 per cent) of businesses interviewed have reported a profit in the last 12 months. 

However, despite the growth ambitions appetite for, and use of, external finance among businesses has declined over time.

For Q2 2012, 43 per cent of SMEs interviewed say that they are currently using external finance, a decline of eight percentage points compared to the 51 per cent in Q1-2 2011.

The proportion of SMEs with an overdraft has dropped from almost a third (30 per cent) to 22 per cent in the same period, while the number with a loan has remained the same.

Where businesses have applied for external finance, in the 12 months prior to interview, most have been successful. Some 90 per cent of loan and overdraft renewals have been approved, compared to 73 per cent of applications for new money from businesses that have borrowed in the past.

First time applicants for loans and overdrafts remain less likely to have been successful (43 per cent).



For the first time in the research, SMEs were asked about using personal money to finance their businesses, with 41 per cent of all SMEs saying they had injected their own money into their business during the past 12 months.

A quarter (25 per cent) say they had taken this course of action because they had no choice, while 16 per cent say they had chosen to self-fund to help the business grow.

Using personal finance is more common in businesses with less than ten employees, newer firms, and those with poorer external risk ratings.

For SMEs with less than ten employees particularly, using their own money for finance was more likely to have been seen as a ‘necessity’ rather than ‘choice’.



BDRC director Shiona Davies says, 'Future appetite for external finance remains muted – primarily by the current economic environment.

'Our data shows that even special measures, such as the NLGS, may only appeal to a minority of SMEs, many of whom say they currently have no need for (more) external finance.'

See also: Businesses confident about growth