Many smaller businesses around Scotland may struggle to access funding and investment to support their growth, according to new survey findings from the British Business Bank.
The bank’s latest research – conducted by Ipsos Mori – found the vast majority (84%) of Scottish accountants, lawyers and business finance advisors surveyed believe there are gaps in the supply of finance throughout all stages of company growth and development.
Nearly three-quarters (71%) said the demand for finance outweighed the level of supply.
Increased borrowing during the pandemic has perhaps contributed to the rising demand for early and growth-stage equity, with some businesses unlikely to be in a position to take on additional debt finance.”
Mark Sterritt, British Business Bank
Survey respondents also said small businesses, in general, would require additional finance over the next 12-18 months due to the Covid-19 pandemic.
Of those questioned, 86% in Scotland said smaller businesses would require additional debt finance and 79% said the same about growth stage equity or venture capital.
Anticipated demand for additional early-stage equity investment over the next 12-18 months was found to be significantly higher in Scotland (81%) than in the rest of the UK.
And nearly four-fifths (79%) of those surveyed north of the border said small businesses in Scotland would require additional growth stage equity or venture capital due to the Covid-19 pandemic.
‘Rich community’ of smaller businesses
Mark Sterritt, UK network director, Scotland, British Business Bank, said: “Scotland has a rich community of ambitious smaller businesses and access to the right kind of finance plays a crucial role in their growth and development at every stage, from start-ups to well-established companies.
“Throughout the last 18 months we have witnessed first-hand the importance of supporting smaller businesses, and it is unsurprising to see an anticipated need for additional finance to support their continued recovery.”
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He added: “Increased borrowing during the pandemic has perhaps contributed to the rising demand for early and growth-stage equity, with some businesses unlikely to be in a position to take on additional debt finance.
“That said, we have already seen a record-breaking first quarter for small business equity investment across the UK, with £90.9 million invested in Scotland as the economy recovers and investor confidence begins to pick up.”
Respondents, on the whole, perceived Scottish smaller businesses to have relatively low awareness of the equity finance and alternative finance options available to them, with debt finance the only finance option which respondents felt businesses were well-informed about.
Mr Sterritt said: “Our aim is to encourage and support smaller businesses to access and seek the finance best suited to their needs. We understand the small business finance landscape can be complex and difficult to navigate.”
The British Business Bank Finance Hub provides independent and impartial information to businesses about their finance options.
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