SMEs using own cash to fund their firm

More than half of UK entrepreneurs have revealed that their most likely source of funding for major business projects will have to come from their own money, according to a survey by business advisory firm Deloitte.

The survey highlights the tough lending conditions that small business owners are experiencing at the moment, although recent data has suggested that banks are slowly beginning to increase their lending.

Despite tougher lending conditions entrepreneurs continue to rely on banks as their primary source of funding, with 18% of small business owners listing banks as their main source of funding, followed by 10% that turn to existing shareholders.

Just 12% said external investment from private equity, venture capital and angel investors would be their most likely source of cash over the next year – down from 28% in 2008.

“The survey reveals that current business conditions have created an alarming reliance on working capital at a time when more than a quarter of respondents say they are having to monitor their cash position daily,” said Simon Manning of Deloitte.

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