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Improved confidence among smaller businesses

Improved confidence among smaller businesses

Category: Business

Updated: 08/09/2014
First Published: 08/09/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Smaller businesses have had it tough since the financial crisis. Securing suitable funding has been widely reported as next-to-impossible, which meant many have had to seek alternative forms of finance. While this has opened the door to new possibilities, it looks like there could be some hope for those still seeking traditional forms of funding – according to new research, smaller businesses are becoming increasingly confident that their loan applications will be accepted.

The survey, conducted by Clydesdale and Yorkshire Banks, will be welcome news to the industry. Three-in-five small and medium-sized enterprises (SMEs) surveyed felt confident that they'd be successful if they applied for a bank loan to fund their investment plans, with this vote of confidence applying as much to the economy as to themselves, highlighted through substantially improved growth prospects.

Some 37% of businesses surveyed were more likely to invest in growth opportunities than they were a year ago, while 45% feel there are more opportunities available for them to expand than at this point last year. These are promising figures, suggesting that more SMEs believe they'd be successful in achieving their funding goals and expansion plans, ensuring they can reap the rewards of an improving economic situation overall.

Happily, the feeling of improved economic conditions felt by SMEs is mirrored in the latest official statistics, which show that UK GDP was 3.1% higher for the second quarter of this year compared with the same period in 2013.

Paul Shephard, director for business and private banking at Clydesdale and Yorkshire Banks, said: "UK businesses are viewing the economy with increasing levels of confidence and are preparing themselves for the opportunities which come about as a result. To take advantage of the improving conditions, many businesses are innovating, investing in new staff, expanding or purchasing their own premises and entering new markets."

Of course, there's still a long way to go before this feeling of positivity is reflected in the market at large. Small businesses may be feeling more confident that they'll be successful in applying for a loan, but that doesn't necessarily mean they'll get it – even from those banks participating in the Funding for Lending Scheme (FLS).

Official figures show that lending to SMEs through the scheme actually fell by £435m in the second quarter of the year, meaning other avenues of funding will still need to be sought by a lot of smaller businesses. However, this needn't be too much of a problem. There are plenty of alterative funding options available that don't come from traditional sources – bridging finance and invoice factoring to name just two – so there are still options for those smaller businesses looking to expand their horizons by other means.

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