“Grim” future outlook for SMEs

“Grim” future outlook for SMEs

business startup

‘Micro’, small and medium sized businesses on average need £94,000 in start-up capital, according to asset lender borro’s Enterprise Ladder Report.

SME owners were surveyed by borro and said that, since launching their businesses, 38% have had to invest additional personal funds from their own savings into the business.

In addition, one in 10 have taken out short-term loans in the last year in order to help with business cash flow.

Those firms that have had to take out a loan to start their businesses have had a higher average start-up cost of £127,992 of which they have borrowed £84,500, representing 66% of this total start-up cost.

Among the businesses that used a loan to help cover part of their start-up costs, 42% have had to take on additional bank loans after the business was launched.

“The UK’s slump into a double-dip recession has not only affected how small business owners perceive starting a new company but our research has also found how many SMEs have had to either take out a loan or dip into their savings only to see that their shareholding has been diluted,” said Paul Aitken, CEO of borro.

“It is a real worry to see that the future outlook and struggle that SMEs are going through is so grim. For those that take the time and effort to start up a business it is only fair that they are rewarded.”

Meanwhile, 22% of business owners have seen their shareholding diluted as a result of taking on new investors or selling a share in their business.

This is more commonplace in businesses with 10 or more employees, with 31% having seen their share decreased.