UK Companies Shying Away from Important Business Loans
The 2007 financial crisis may well be behind us, but the effects of the recession are still very much with us, it seems, as an increasing number of British businesses are shying away from financial aid. Business loans have long been thought of as essential for business growth and development, enabling companies to grab opportunities as they arise, expand their products and services, and boost awareness of their brand. However, with approval rates that are still not quite at their pre-crisis level, and with many businesses now more aware of the risks involved in securing high interest business loans, the number of companies who are actively seeking out or accepting financial aid is dwindling, according to reports.
Hitachi Capital recently carried out a survey looking at current perceptions of business loans, and how businesses were opting to finance growth. Shockingly, only 20 percent of UK businesses are reported as accepting financial aid, and this includes not only traditional business loans, but also alternative forms of financing including invoice trading and peer-to-peer lending. Instead, UK business are choosing to…
- … Fund ongoing business development through personal funds. It’s reported that around 30 percent of businesses have dipped into their personal bank accounts to help their business grow without the need for business loans, potentially putting themselves at great financial risk.
- …Fund ongoing business development through overdraft facilities Unfortunately, this is not considered to be a sustainable choice, with 30 percent of businesses having their overdraft limits reduced recently, and an estimated 17 percent having their overdraft facilities removed.
- …Fund ongoing business development by asking friends and family to help out. According to Hitachi Capital, around 7 percent of businesses are borrowing from family members. While arrangements such as this can work out, again it can potentially be very financially risky.
As the economy is continuing to recover, and as alternative business loans which minimise risk to both parties are becoming more standard, businesses are being urged not to sacrifice the growth of their company because of worries born from the financial crisis. 60 percent of modern businesses don’t see growth in their future – in fact, just 6 percent of UK businesses are expected to expand significantly in the coming years – and this is something that needs to be changed. Compare business loans online to find rates and policies that work for your business, and provide you with the resources you need to grow.