A report from VC firm Albion Ventures found that just 10 per cent of SMEs had applied for finance in the past year, compared with 17 per cent in the previous. However it also found that 80 per cent of those who did were successful, versus 71 per cent before.
The report also reveals a snapshot of the business funding landscape which suggests a shift from funding for survival towards funding for business expansion. In the previous year 32 per cent sought working capital funding, compared to 24 per cent this year.
More than a quarter (27 per cent) raised money to develop their business (26 per cent last year) and 23 per cent raised money to expand their premises (5 per cent last year).
Patrick Reeve, managing partner at Albion Ventures said: Demand for bank finance and the reasons for needing it are key proxies for the health of UK SMEs and there are reasons for optimism on both counts. Not only have firms been more successful in applying for finance but their motivations are more about growth than funding working capital.
Demand for finance is particularly strong among the growing band of so-called threshold businesses with turnovers of between 500,000 and 1 million, which are on the cusp of becoming established companies.
“Twice as many of threshold businesses attempted to raise finance in the past 12 months and 68% of them needed capital to grow compared to 41% of other types of SMEs.