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Recruitment SME’s Struggle to Trust Traditional Lenders

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Business owners of small to medium recruitment agencies are amongst the most likely type to distrust traditional lenders, new research has revealed.

When asked to what extent recruitment agencies trust such lenders, for example banks, 30% said they do not. The main reason for not trusting them is down to the bank’s reputation (42%) and for reasons relating to a personal bank loan (42%).

The study, from Hitachi Capital Invoice Finance, also shows how 90% of SME recruitment agency owners have invested personal funds into the business in the past 12 months. The re-mortgaging of a property was the next most popular type of personal funds that have been invested into the business (27%).

Of the 502 business owners surveyed across all sectors, the main reason for not wanting to borrow money is that companies want to owe as little as possible (53%), with a further one in ten admitting that borrowing money has led the business into further debt in the past.

The media does not appear to affect business owner’s attitudes towards traditional lenders (9%).

Andy Dodd, Managing Director at Hitachi Capital Invoice Finance commented:

“It’s interesting to see business owners remaining cautious with regards to business funding, potentially restricting their ability to grow. There appears to be an ongoing negative perception of more common lenders, despite them using this option to keep their businesses funded. This shows a clear discrepancy between SME’s wanting to borrow from these types of lenders and them needing to.

More than twenty percent also noted that maintaining their cashflow is a top concern for them for the year ahead, and indicates this is something they are currently struggling to manage. It is important for business owners of any kind to be aware of the funding options available to them and what they are eligible for, as there are a number of options available to help prioritise overdue payments and maintain financial resource, particularly outside traditional lenders.”

Start-up business owners (of companies established for 12 months or less) tend to trust traditional lenders the most (28% completely trust them and 37% somewhat trust them). This is also the case for younger business owners.

More established businesses have the least trust in traditional lenders (only 14% completely trust them.)

When it comes to location, those based in London are the most trusting (65% do trust them) and those in Northern Ireland, the least (53% said they do not trust them.)

Top five SME business concerns for 2018:

  1. Turnover (38%)
  2. Brexit (28%)
  3. Bringing in new customers (27%)
  4. Market competition (24%)
  5. Cashflow preservation (21%)

To read the full white paper report, visit: www.hitachicapital.co.uk/sme-attitudes-to-borrowing