High growth small and medium-sized enterprises (SMEs) are reluctant to seek finance from banks to fund growth, a study by the Institute of Chartered Accountants of Scotland (ICAS) has found.

The study found that high growth SMEs are “highly reluctant borrowers” because of their lack of trust in banks. Many firms also said they were unwilling to sacrifice their autonomy in order to access bank finance.

The study also found that high growth SMEs:

• are 9% more likely to seek bank finance than other SMEs but are no more or less likely to receive it
• prefer bank finance to equity finance
• are likely to use a ‘mixed cocktail’ of finance, including internal resources and debt.

The report, Funding issues confronting high growth SMEs in the UK, was launched to study the demand for finance among high growth SMEs and investigate the problems they encountered.

It focuses specifically on high growth SMEs because of their capacity for growth and employment.

To read more about the recommendations to increase the liquidity to SMEs http://www.grant-jonesaccountancy.com/news-item/smes-reluctant-borrow

Fiona@grant-jonesaccountancy.com