Growth and funding ambitions have strengthened amongst SMEs over the course of 2019, according to the latest report by Independent Growth Finance (IGF), the leading independent asset based lender. Almost three quarters (73%) expect to see their revenues climb in the next 12 months, compared to 69% at the start of the year. Of those seeking to raise funds to support growth, the average amount has also increased by 22%, or £250,000.
Despite a turbulent year, IGF’s Powering Freedom Report finds that British businesses turning over between £1m and £500m are determined to secure a brighter future. Little has proved effective in reducing Brexit concerns amongst SMEs – up from 90% to 93% since January. Yet, new findings suggest investment is high on the agenda for 2020.
Three quarters of businesses (75%) are looking to secure funds in the next 12 months. On average, they are seeking £1.4m, up from £1.15m. A 22% increase on funding sought at the start of the year. The majority of this spending is earmarked for innovation with investment being poured into technology (45%) and product development (27%). Similarly, retaining staff (30%) is a key investment area for businesses, while international expansion (16%) is also on the agenda.
To enable these plans to become a reality, however, businesses need to secure suitable funding. As a result, 85% are open to switching their funding provider in exchange for more flexibility (35%), sector-specific expertise (32%) and 48-hour decision-making (26%).
John Onslow, CEO of Independent Growth Finance said, “It’s incredibly encouraging to see so many SMEs focused on the future. Making decisions that are best for them and their employees in an unpredictable landscape. This includes a greater willingness to switch funding providers to get the flexible funding they need, when they need it. We’re not surprised that our research shows three of the top five funding sources are alternative finance.”
Kerrie Murray CFO at Pryme Group, a provider of integrated manufacturing solutions, explains why the company is continuing to move away from traditional funding.
Murray said, “We work with key partners in the alternative finance space so we can be nimbler. Independent Growth Finance is our biggest lender, which makes the decision-making process simpler and less time consuming. It also allows us to be confident that our budget and plans provide sufficient flexibility to react to external developments if and when they unfold.”
Onslow added, “Many would have expected the bullish spirit we revealed in January’s report to have waned under Brexit-related uncertainty. Yet, what we’re actually seeing is an even more determined outlook. Determination to grow and innovate is higher than the start of the year amongst UK SMEs. It’s in all our interests that they have access to the right financial support to help them make it a reality.”