Lack of knowledge on alternative ways of raising finance hitting businesses

Clare Boswell, Yorkshire area director of Lloyds Bank Commercial Finance, said new research revealed that many local businesses would be able to invest more in people and expansion if they knew how to access additional funds.

She warned that failing to use options such as invoice finance and asset-based lending instead of relying on loans and overdrafts, could hold back recovery.

“Our research found that more than half of SMEs in Yorkshire are more confident about investing in growth this year than they were 12 months ago.

“Despite this, SMEs are missing out on the opportunity to recruit new staff, break into new markets or develop new products because they are not harnessing the full range of funding options available that could unlock the value in their assets or invoices to help them grow. As a result, businesses are turning down contracts that they think they cannot afford to fund and are holding back their own growth potential,” said Clare.

The research showed that SMEs own £770 billion in assets – equivalent to 48 per cent of the UK’s GDP – and are owed £291 billion in outstanding invoices which could be used to fund future growth. In Yorkshire, the average SME is owed nearly £75,000 in unpaid invoices Clare Boswell said the gap between awareness and use suggested that too many businesses still did not understand the full range of finance products available to them, how they worked and how they could simply and quickly give them the funds they needed.

Invoice finance could help businesses release cash quickly, giving them access to up to 90 per cent of the value of their issued invoices, often within 24 hours. Only nine per cent of firms had used invoice financing in the past 12 months, whereas nearly a quarter had .relied on overdrafts to and 33 per cent on loans to raise finance.