Expansion may well be top of the priority list for many SMEs in Britain for 2014, however new data released by AXA’s Business Insurance Division suggests that many are missing a trick. The research suggests that a large proportion of SMEs are either unaware, or simply not making the most of the initiatives which have been made available to help them raise the most important component related to expansion: capital.
Undoubtedly the biggest obstacle when attempting to grow a business is finance, and yet with various schemes now readily available, a staggering 12% of SMEs actually accessed funding in the last 12 months. Instead, 44% elected to rely on overdrafts or credit cards as their route for the additional funds required, and a further 20% went for a bank loan.
In terms of utilising the options available to them, the research found that just 6% of SMEs had used the Seed Enterprise Investment Scheme (SEIS) or the Enterprise Investment Scheme (EIS). 7% had taken on a loan form the government, and 5% had used the funding for lending scheme.
AXA has warned that over 80% of the UK’s SMEs are without any understanding of modern day methods of attracting investment, and as such are likely to struggle to grow their business. Even the well-publicised crowd-funding and peer-lending options were basically a mystery to 70% of those polled.
The results are undoubtedly surprising, especially given the huge benefits of initiatives such as the SEIS, a scheme which encourages investors to place funding into start-ups on the proviso of extremely attractive tax-breaks and benefits.
Despite the lack of knowledge relating to where to source funding, over 60% of companies polled said they expected to invest in the materials required for expansion during the latter part of 2014 and early 2015.
