ACCA - The global body for professional accountants
We are worried that many SMEs are making decisions and planning ahead without access to the right information and insights
—Manos Schizas, Senior SME Policy Adviser, ACCA

New SME finance monitor provides 'the definitive account' of SMEs' access to finance

Survey findings released today from BDRC Continental are welcomed by ACCA (the Association of Chartered Certified Accountants) as the first definitive, independent record of access to finance for small and medium sized enterprises (SMEs) in the UK.

The survey of 5,000 SMEs, the largest ever of its kind, found that about half of all UK SMEs are not currently using any external finance and only eight per cent had applied for a new loan or overdraft in the twelve months to May 2011. The majority of SME applicants were eventually able to access the funding they needed, whether overdrafts (85 per cent) or loans (66 per cent), although the process was not always straightforward. 

ACCA says that the research shows how vital it is for SMEs to produce accurate information so they can access finance. 

Manos Schizas, senior SME policy adviser at ACCA, says: 'The survey results show that there is a 'magic circle' of SMEs, established businesses with good credit ratings seeking to renew existing facilities, for whom the finance supply chain is now working quite well. The rest, however, are more likely to get turned down for finance outright. We think information is at the heart of this divide; the banks are happier to lend when they understand what they are getting themselves into. Though we cannot know for sure, our fear is that this divide is widening.'

ACCA was pleased to note in the research that 'almost all' of the SMEs seeking advice on overdraft applications and the majority of those seeking advice on loan applications spoke to an accountant first; but the fact remains that too few SMEs are taking advice, regardless of the source - only nine per cent of those seeking overdrafts and 20 per cent of those seeking loans. This is worrying, as the survey also found that only one in five SMEs had a person with any financial training in charge of their finances.

Manos Schizas adds: 'We are worried that many SMEs are making decisions and planning ahead without access to the right information and insights. Of course, we'd rather they used accountants, but they really could be doing more regardless of who they talk to. There are a range of resources out there - from the trusted professionals that we represent to business representative bodies and government resources, including the SME mentoring scheme announced last week.'

'Perhaps with the right type of advice demand would not be so weak: the survey shows that demand for growth-oriented loans is very elastic. But while credit-financed growth is welcome but mostly optional for individual SMEs, at the macro level this is not the case. If you were George Osborne trying to work out the upper-end to the range of UK growth forecasts for next year, this would be the sort of thing to make you worry.'

ACCA says that the survey will become an increasingly powerful tool as new data comes in quarter by quarter. For now, however, ACCA is hoping for an explicit commitment from all involved parties – the banks, SME representative bodies and the government – that they will treat these high quality data as the definitive record of SME access to finance going forward.