One in 10 SMEs have taken a loan in last year

Research released today from borro's Enterprise Ladder Report reveals that micro, small and medium sized businesses require £94,000 start-up capital on average to get their busines

Related topics:  Specialist Lending
Amy Loddington
3rd July 2012
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borro, the UK's fastest growing personal asset lender, polled SME owners and discovered that since launching their businesses, over a third (38%) have had to invest additional personal funds from their own savings into the business.  Not only have SMEs had to dip into their personal savings, one in ten have taken out short-term loans in the last 12 months in order to assist with business cash flow.

In addition to this, those businesses that have needed to take out a loan to start their businesses have had a higher average start-up cost of £127,992 of which they have borrowed £84,500 - 66 per cent of this total start-up cost. Among the businesses that used a loan to help cover part of their start-up costs, 42 per cent have had to take on additional bank loans after the business was launched.

The Enterprise Ladder recently revealed that the last five years have seen the nation's small business owners really struggle to keep their heads above water. 46 per cent of all small business owners have seriously considered either selling their business or closing it down completely so it is no surprise that business owners have had to take out loans or dip into their own pockets.

Paul Aitken, CEO of borro, comments:

"The UK's slump into a double-dip recession has not only affected how small business owners perceive starting a new company but our research has also found how many SMEs have had to either take out a loan or dip into their savings only to see that their shareholding has been diluted.  It is a real worry to see that the future outlook and struggle that SME's are going through is so grim.  For those that take the time and effort to start up a business it is only fair that they are rewarded"

Research further reveals that almost a quarter (22%) of business owners have seen their shareholding diluted as a result of taking on new investors or selling a share in their business.  In businesses with ten or more employees this is more common with 31 per cent having seen their share decreased.

Paul Aitken adds:

"With 2012 perceived as being one of the toughest years yet to either launch a small business or keep one afloat, SME owners are increasingly having a look at alternative ways to secure the finance they need. Small businesses are at the heart of the UK economy and need to be provided with quick secure lending facilities. At borro, it comes as little surprise that small business owners represent 60 per cent of the growing client base."
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