"DEBT-shy" small and medium-sized enterprises are reluctant to borrow funds for growth because of a lack of trust in banks and a resistance to yield control of the business to outsiders, a Scottish study has found. The study, by the
The research for the "Funding issues confronting high growth SMEs in the
Another key finding of the study is that high-growth SMEs tend to want access to bank finance, rather than equity funding. And they are more likely to use a "mixed cocktail" of finance, combining internal resources and debt, the research shows.
He said: "This research dispels some deeply held misconceptions in relation to high-growth SMEs. These firms are predominantly funded by bank debt, not equity sources of funding. While many use bank lending to fund capital expansion, some draw heavily on their internal resources to fund their growth."
The accountancy body highlights the recommendations of the researchers, who flag a need to consider how reluctant borrowers might be transformed into willing recipients of debt and equity finance.
The researchers also conclude government policy initiatives should be more targeted towards SMEs with growth potential and focus more on the supply of long-term finance and debt, rather than equity funding. They also cite a need to address "systematic issues" within
However, the rise in May was much smaller than net drops in lending to non-financial companies of pound(s)2.1 billion in March and pound(s)2.2 billion April.
"It is also notable that bank lending was lifted appreciably in May by lending to the energy sector to fund infrastructure."
He added: "It remains to be seen if May's increase in lending to businesses is the start of an improving trend. With the
"DEBT-shy" small and medium-sized enterprises are reluctant to borrow funds for growth because of a lack of trust in banks and a resistance to yield control of the business to outsiders, a Scottish study has found.
The study, by the