• Swindon & Wiltshire Economy
• Thursday October 17 2024
• Author Name: Peter Davison

South West business owners turn to credit cards as they struggle to access SME lending – report

Business owners in the South West are turning to credit cards as they struggle to access SME lending, according to a new report by the British Business Bank.

The Bank’s Nations and Regions report found that external finance usage in the South West rose to 45 per cent in 2023 – up eight points from the previous year, but slightly below the national average.

Credit cards were the borrowing method of choice for 17 per cent of business owners, after bank overdrafts (13 per cent) and leasing, hire purchase and vehicle finance (12 per cent).

And a higher percentage of businesses in the South West made investments over the preceding three years than any other UK region, at 53 per cent, reflecting – said the Bank – cautious optimism.

The British Business Bank welcomed businesses’ willingness to invest, but said the situation highlighted the challenges for firms seeking external finance.

Around four in 10 South West businesses (39 per cent) said they could not access the finance they needed at a reasonable rate of interest.

However, the first half of 2024 saw a 21 per cent increase in the volume of approved loans and overdrafts from the top SME lenders.

The report also found that owners of smaller businesses in the region were slightly more pessimistic than their counterparts in other UK regions, with 67 per cent seeing more threats than opportunities in the recent landscape – above the national average of 61 per cent.

Steve Conibear, UK network director for the South West at British Business Bank, said: “Despite the challenging economic environment, it’s encouraging to see businesses in the South West increasingly turning to external finance, reflecting a sense of cautious optimism.

“The region’s businesses have shown resilience, with a higher percentage making investments over the last three years than anywhere else in the UK.

“The British Business Bank remains committed to supporting the South West’s dynamic business community by providing access to the finance they need, helping unlock their potential and drive long-term growth across the region.”

Responding to the difficulty businesses report in accessing finance John Peters, managing director of SWIG Finance, said: “Many smaller businesses can’t find what they need from their bank, and often either pause investment or go online and take out loans which aren’t suited to their needs.

“This is where Community Development Finance Institutions like SWIG Finance come in. We take the time to get to know our customers and understand their plans before making a responsible, human-based decision.

“Our support can include refinancing high-cost debt which might have been taken out to fulfil a short-term requirement but is actually starving the business of much-needed working capital.”

Find out more about SWIG Finance here

Image by Michal Jarmoluk from Pixabay

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