A fifth of small business owners think their bank manager is ‘not helpful’ when dealing with their company’s needs, however many still rely on them for help with cash flow problems, new research reveals.
A survey, conducted by Bibby Financial Services and Growing Business magazine, found that 28% of small businesses consider their banks’ inflexibility to be their greatest challenge when trying to secure funding.
Despite this nearly a third of entrepreneurs (30%) still rely on their bank’s funding to stave off cash flow problems, the survey found.
Banks possess a ‘stranglehold’ on small enterprises, as many entrepreneurs appear to find it difficult to break with tradition and seek alternative funding options.
Also, among entrepreneurs who do seek funding from other outlets, 37% say they would still consider approaching their bank for funding.
David Robertson, chief executive of Bibby Financial Services, says many businesses go to their bank because of the ‘fear factor’ of approaching other outlets.
He said: “While more flexible forms of funding such as invoice and asset-based finance are becoming increasingly popular with small business owners, it seems that small businesses are still facing the ‘fear factor’ when it comes to breaking with tradition and looking beyond their high street bank for financial help.
“With the bank being an integral part of life from an early age in managing our personal finances, it’s only natural for those venturing in to new territory and starting their own business to seek the security of the familiar in the shape of their high street bank.”
In the first quarter of this year, over 45,000 businesses were advanced over £11bn through schemes such as invoice finance.
© Crimson Business Ltd 2006
