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The ACCA has given written evidence to the UK Parliamentary Treasury Committee inquiry into SME finance, which stated that the proportion of SMEs having problems accessing finance remains below the long-term average.
Drawing on its Global Economic Conditions Survey (GECS), ACCA data shows that firms are struggling to secure working capital due to several factors including rising interest rates.
57% of SMEs also reported borrowing to manage cash flow has been more difficult in the last quarter than over the previous 12 months, while 47% say that supplier credit is harder to access. 27% have admitted that accessing support from HMRC’s ‘Time to Pay’ scheme is more difficult.
In addition, ACCA members noted that late payments by large corporate companies have the biggest and most detrimental impact on the stability of small businesses, with late payments from large businesses creating a ‘domino effect’ throughout the supply chain.
As a result, alternative channels for finance currently remain the most significant source of external finance for formal small firms, as bank finance is generally only available to those who can offer collateral or a strong record of generating profit.
Glenn Collins, head of technical and strategic engagement at ACCA UK, said: “More effort is needed in encouraging banks to reach out to the SME community and to provide more suitable financial products. But the established high street banks aren’t the only show in town when it comes to business finance.
“Equity finance offers an alternative route to raising funds. And the government needs to join up thinking to make sure it is not accidently restricting the flow of finance to this crucial sector.”
The ACCA is calling for funders to publish statistics to show the proportions of funding applications approved, agreed in full, partially agreed or rejected by demographic, for example, gender, ethnicity, and type of business.
The association believes that such statistics might help establish whether there is or continues to be a disparity or whether businesses might be self-selecting out through perception issues.
