Majority of businesses struggling to secure funding for growth, GT finds

While many businesses expect they will need additional funding to support their growth this year, the majority are finding it difficult to secure the funding needed, according to new research from Grant Thornton. The firm, which surveyed 800 UK businesses, found that 70% expect that they’ll need to apply for additional funding this year. 

The most common amount needed was between £10m – £25m, with the top reasons for funding named as investment into new premises or equipment, and investment in R&D or new service offerings. 

Over one quarter of those who required funding also said that it would be needed to manage challenges in the market, including to “support liquidity requirements linked to challenging trading conditions” (29%) and to manage the impact of rising employment costs’ (26%). 

The majority of those surveyed anticipate it will not be easy to secure the extra funding needed, with 68% saying their business is currently finding it hard to access new sources of funding. 

As a result, many 69% are increasingly turning to alternative lending sources, such as asset-backed loans or specialist credit funds, or a debt fund.

According to Grant Thornton, a lack of funding is also constraining businesses’ abilities to boost their productivity levels, being hit by regulatory barriers or compliance requirements, as well as the complexity or length of the funding application process.  

Almost three quarters (73%) of the businesses surveyed believe that the government needs to do more to help improve access to private sources of funding for businesses, such as enhance tax incentives for private investors in high-growth sectors.  

George Fieldhouse, partner and head of Debt Advisory, Grant Thornton UK LLP, said: “Access to funding is crucial for driving business growth and while businesses of all sizes are anticipating that they’ll need to access additional funding this year, many are not expecting it to be a straightforward process. 

“Accessing new or additional funding can be a complex process and so preparation is key. All businesses need to be able to demonstrate strong business fundamentals, including evidence of performance, robust and maintainable revenues, and controlled costs. Increasingly, borrowers also need to be able to demonstrate that their ESG credentials will support a lender’s ability to meet its own sustainability commitments.”