Welsh SMEs least likely to get thumbs down from lenders

Welsh businesses least likely to get thumbs down from lenders

• Under a third (30.4%) of SMEs in Wales have been unsuccessful with a loan application, the lowest in the UK
• Yet a fifth of Welsh businesses would never think to apply for financial help
• Two in five say they are put off because of the language in the loan application

Small business owners in Wales are the least likely to be turned down for funding in the UK, with just under a third (30.4%) saying they had been refused a loan application.

Research into SMEs across the UK by LDF, the largest independent provider of finance to small businesses, also found that 43.5% of business owners in Wales think the language used by lenders is off-putting. In fact, a fifth of small business owners in Wales (21.7%) say they would never apply for funding.

Terms like COGS (52.2%), EBITDA (47.8%) and balloon payment (47.7%) are the least familiar for Welsh entrepreneurs, but some terms are more recognisable than others. Fewer Welsh business owners misunderstood the term ‘Asset Finance’ (21.7%).

“It’s disappointing that small business owners in Wales are put off applying for finance by the terminology used, especially as our research suggests that they are the least likely in the UK to be turned down for finance,” says Peter Alderson, managing director of LDF. “For many, running a small business is a challenging, all consuming activity, so complicated financial jargon and acronyms are just extra barriers in the way of their success.

“At LDF, we are committed to making not just the terminology of finance, but access to it, as easy, quick and trouble-free as possible.”

Although one in five SMEs in Wales would never take out business finance, the rest have a positive attitude since they’re the most likely to see it as a sensible way to spread cost (26.1%). Elsewhere, 43.5% say that they see it as a necessary part of business growth and 34.8% think that a loan application is a normal part of business.

Welsh SMEs, however, have not been immune to the approval of, or time taken to receive money or both. Almost a quarter (23.1%) say it has caused them to lose business, while 46.2% decided not to pay themselves.

On an emotional level, over half (53.8%) of the SME owners say that they have felt stressed by the situation while 38.5% say it made them feel depressed.

The research was conducted for LDF by Opinion matters between 27.01.17 and 06.02.17 and sampled 506 SME decision makers in construction, professional services, administrative services, wholesale & retail, human health/medical and manufacturing.