One in four SMEs had financial difficulties in past 12 months

Jake Carter

March 2, 2020

One in four, 39%, of UK SMEs encountered financial challenges over the past 12 months, according to data collected by Nucleus Commercial Finance.

Of this group, 24% of business owners dipped into their personal savings to address financial issues, while 27% took no action.

The data shows that when asked which financial issues affected their business, impacts on margins due to price increases came first at 48%.

Furthermore unforeseen expenses came in at 42%, late payments leaving the business short of cash at 39%, and a drop in sales at 38%.

Businesses of less than five employees were more likely to use personal savings to aid their business at 33%, however, also more likely to take no action at all at 40%.

Meanwhile large companies were more likely to borrow from a high street bank at 27%, or an alternative lender at 34%, if they faced financial hardship.

Chirag Shah, chief executive officer at Nucleus Commercial Finance, said: “We often see that businesses face financial difficulties, however, what’s alarming is that SME owners are using personal savings to support their businesses, or even more worryingly, not taking any action at all.

“As we enter a new year, we encourage business owners to be more vigilant of their finances and be more aggressive when it comes to growing revenue.

“Entrepreneurs should rest assured that there are options available and as an industry, we should be educating them on the benefits of seeking external finance.

“Together we can help SMEs be better equipped to tackle any financial challenges; boosting performance and ultimately improving the country’s GDP.”

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