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More than half of SMEs expecting growth

Small business confidence is at an all-time high, with more than half (51 per cent) of SMEs looking to grow their business in the next 12 months, according to findings from the BDRC Continental Finance Monitor for SME lending.

However, BDRC Continental voiced concerns that the banking industry could potentially 'put a break on growth' rather than providing the necessary funds to support SMEs.

It found that traditional banking products such as loans, overdrafts and commercial mortgages are being used by only one in three SMEs, continuing the downward trend witnessed over the past two years.

Credit cards were the only traditional form of financing to increase in use but this was to provide assistance with cash flow issues, as opposed to funding long-term growth.

One in five SMEs are turning to external finance sources - including friends and family - to support their growth plans.

Other key findings from the BDRC Continental report include:

  • business sentiment in Q2 2013 is at the highest level since the report's inception
  • a three per cent increase in the number of SMEs using lease and hire purchase - up from six per cent to nine per cent and the highest proportion since the report began
  • one in five business owners using personal funds to finance their business.

The Forum of Private Business (FPB) said the data was a 'sure sign that businesses recovery is finally underway.'

Chief executive of the FPB, Phil Orford, said: "This latest data further highlights the urgent need for the banks to lend to businesses looking to grow and employ. Without further support for Britain's SMEs, a key driving force behind the economy, the recovery could stall before it has been given a chance to take hold."

"Businesses need to have access to more information about the current finance support schemes, more comprehensive advice on the alternatives available and easier access to the appeals process when an application fails."