AROUND 100,000 small and medium firms in the UK were refused bank loans during 2015, business owners heard at a networking event in Bradford.

Delegates to the latest Yorkshire Enterprise Network event heard that the funding drought was partly responsible for the high failure rate of new businesses - with 60 per cent failing to survive beyond the first three years.

The YEN / Telegraph & Argus event at the Midland hotel was attended by more than 120 delegates from across Yorkshire. It featured a panel of experts providing advice on funding opportunities for SMEs.

David Guild, business development manager at the Bradford-based Business Enterprise Fund, said many emerging firms were unaware of alternative sources of funding.

He said 66 per cent of small businesses apply to only one lender for finance – usually their own bank – and do not seek alternative quotes. When rejected, 40 per cent do not try anywhere else and only 19 per cent of SMEs seek external professional advice.

Mr Guild said: “The alternative finance market is often quoted as very low, at 3.4 per cent of the £53billion of bank lending to all SMEs in 2015. But the British Bankers Association estimates bank lending to businesses with up to 50 employees at £6.34 billion, which then brings the figure to 12 per cent with a substantial impact for small businesses.

"In 2015, 20,000 SMEs used alternative finance - up from 7,000 in 2014 - of which over 10,000 used online alternative funding worth £881million.

“But lack of awareness is still a massive barrier. While awareness about crowdfunding is now at 50 per cent, many people are unfamiliar with the range of options available to them. The message is that first refusal doesn’t necessarily mean the end of the road.”

Mr Guild added that latest banking data showed that there were now approximately 350,000 new start companies launching each year with small businesses employing under 50 people accounting for 85 per cent of new job creation.

Yet new start and young businesses make up 50 per cent companies rejected for loans. usually because many traditional bank loan criteria are based on a business track record .

Sheraz Malik. YEN director, said: “It was the first time we’d held a panel session like this and hopefully the information shared will help some of the delegates to access the funding they need to grow their businesses as well assisting some potential new starts in getting their projects off the ground.”