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Bank Lending

MHA funding and finance report 2014 launched

By CreditMan Thursday, January 9, 2014

Now, more than ever, is the time for funders and advisers to help business owners access the most appropriate funding to help them to continue to grow their businesses - one of the key findings of the latest MHA Funding and Finance Outlook survey.

Key findings

- There is a real optimism for growth in 2014, with 40% of our respondents saying they expect growth over 10%.
- 58% of respondents found fundraising "very easy", "easy" or "average".
- Over a third of funding raised in 2013 was for investment in property and plant.
- 30% of respondents sought advice from their accountants and 29% from their bank.
- The infamous 'equity gap' still appears to exist - typically between £500,000 and £5m.
- Bank debt and asset-backed debt accounted for over half of the funding.

Respondents to the MHA 2014 Funding and Finance Outlook survey expressed their optimism for 2014. The MHA survey findings reflect the predictions for growth announced in the Bank of England's 2013 Credit Conditions survey, with 89% of respondents anticipating at least some levels of business growth this year. 40% expect moderate to high growth and only 11% expect business to contract or remain flat. The MHA survey also identifies an increase in business confidence which is underlined by the fact that 26% of SMEs plan to raise finance in the coming year, with another 27% undecided.

Despite much press comment in 2013 focusing on the lack of funding available to SMEs, the MHA survey finds that confidence in banks remains relatively high. 40% of respondents turned to their bank to obtain loans in 2013 and 58% found access to funding 'average', 'easy' or 'very easy'. High street banks continue to have a significant role to play in funding SMEs going forward. The main barriers to sourcing finance in 2013 were identified as the costs of raising finance (22%), economic uncertainty (19%) and the unavailability of finance (16%). However, 68% of respondents report that a lack of access to finance is not restricting their ability to grow. Despite expressing some awareness of the various government funding schemes available, respondents raise real concerns over the complexity of access to funding.

Laurence Whitehead, head of corporate finance at MHA, says: "There are likely to be some exciting developments ahead for those SME businesses that are financially strong enough to take advantage of the growth opportunities which are starting to present themselves. Now, more than ever, is the time for funders and advisers to help business owners access the most appropriate funding, taking into account the sectors in which their businesses operate and their key growth drivers. This opens up opportunities not only for SMEs to access more varied and creative sources of funding, but also for the government and the finance industry as a whole to play their part in the economic recovery, by supporting our successful business owners with clear guidance on their funding options."