Eight in 10 SMEs avoid borrowing

Seventy-eight per cent of SMEs have not sought or wanted any loans or overdrafts in the last 12 months, a survey by BDRC Continental shows.

In its quarterly SME Finance Monitor, which is based on more than 50,000 interviews with SMEs, BDRC shows that just 15 per cent of SMEs interviewed in Q3 2013 borrowed money in the last 12 months. This is a decline from a peak of 25 per cent in Q1 2012. 

An additional 7 per cent of SMEs were “would-be seekers” of finance ? they would have liked to apply for a loan or overdraft but felt that something stopped them.

The research does show, however, that 38 per cent of SME owners have injected personal funds into their business in the last year. This is down from 46 per cent a year ago, and indeed fewer SMEs report that they had to inject funds (20 per cent of SMEs compared to 26 per cent in Q3 2012).

Other areas covered by the research include:

Success rate

According to BDRC, 70 per cent of all loan and overdraft applications reported by SMEs have resulted in a facility, showing that most businesses that do apply for borrowing are successful. This is an increase on earlier this year, when the success rate was just 61 per cent.


Fewer SMEs now use an overdraft facility. Just 16 per cent reported having an overdraft, the lowest level recorded in the Monitor to date.

Success rates of applications for overdrafts made in the first half of the year were lower than in previous quarters, falling to around 65 per cent (against a 75 per cent success rate in 2012).


Around six out of 10 loan applications resulted in a facility, which has been the case for the last couple of years.


There are signs of increased optimism about the future, even though this has not translated into future appetite for finance, which remains muted.

Forty-seven per cent of SMEs plan to grow in the next 12 months. This is slightly lower than the 51 per cent reported in Q2 this year. 

The current economic climate continues to be seen as the main obstacle to running the business (26 per cent), particularly for smaller businesses. 

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