Manufacturing SME’s have most trust in traditional lenders


Business owners of small to medium sized manufacturing companies appear to trust traditional lenders the most, new research has revealed.

The study, from Hitachi Capital Invoice Finance shows how 61% said they do trust traditional lenders (such as banks), which is significantly higher than other business owners in the recruitment (30%) and business services sector (22%).

Those in the manufacturing sector also appear to be more open to borrowing money for the business, as 27% said they do not tend to avoid borrowing from such lenders, which is lower than the average business that does avoid borrowing money (35%).

Of the 502 business owners surveyed, those in the Manufacturing sector also had the largest concerns over Brexit, with 29% claiming that it is their top concern for the business year ahead, although a higher percentage of all respondents (40.60%) have concerns over sales/turnover.

The research also highlights how almost half of manufacturing business owners (49%) prefer to use an independent financial advisor to research their available funding options, rather than an accountant. (30% stated they wouldn't use an accountant.)

For business owners surveyed across all sectors, 35% said they try to avoid borrowing money for the business at all costs. The main reason for not wanting to borrow money is that companies want to owe as little as possible (53%), with a further one in ten admitting that borrowing money has led the business into further debt in the past.
Andy Dodd, Managing Director at Hitachi Capital Invoice Finance commented: “It’s interesting to see business owners remaining cautious with regards to business funding, potentially restricting their ability to grow. There appears to be an ongoing negative perception of more common lenders, despite them using this option to keep their businesses funded. This shows a clear discrepancy between SME’s wanting to borrow from these types of lenders and them needing to.
More than twenty percent also noted that maintaining their cashflow is a top concern for them for the year ahead, and indicates this is something they are currently struggling to manage. It is important for business owners of any kind to be aware of the funding options available to them and what they are eligible for, as there are a number of options available to help prioritise overdue payments and maintain financial resource, particularly outside traditional lenders.”
Start-up business owners (of companies established for 12 months or less) tend to trust traditional lenders the most (28% completely trust them and 37% somewhat trust them). This is also the case for younger business owners.
More established businesses have the least trust in traditional lenders (only 14% completely trust them.)
When it comes to location, business owners based in London are the most trusting (65% do trust them) and those in Northern Ireland, the least (53% said they do not trust them.)

Top five SME business concerns for 2018

  1. Turnover (38%)
  2. Brexit (28%)
  3. Bringing in new customers (27%)
  4. Market competition (24%)
  5. Cashflow preservation (21%)

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