US SMEs Experiencing Funding Difficulties

Nearly half (44%) believe access to funding from banks is gradually improving

New York, US 11th July 2018 – More than half (57%) of US SMEs are finding it difficult to access funding from banks, while over half (56%) believe access to funding hasn’t improved in the past five years according to a survey of business owners and senior decision-makers across a wide range of small to medium-sized US based organisations.

The survey commissioned by FinTech provider Fraedom, found that investing in technology was seen as a priority among SMEs, with just under half (44%) revealing that they would utilise previously loaned cash in this way. Furthermore, more than half (51%) of respondents stated they would use funds for working capital or cash flow. However, more than a quarter (26%) say they would use it for new premises while 20% revealed they would use it for hiring new staff.

“The ability to raise finance quickly and easily is critical to all SMEs whether they are looking to expand their operations and drive dynamic growth or struggling to stay afloat,” said Kyle Ferguson, CEO, Fraedom. “Banks have always been a major source of funding for smaller businesses. If SMEs are finding it increasingly difficult to access funding from banks, that has to be a significant concern.”

The survey also found that more than half of SMEs (55%) claim to have a near real-time view over their business spend while 40% said: ‘We have a clear view picture at the end of each month but little insight on a day to day basis. However, still nearly a quarter (22%) confessed that they ‘regularly spend significant time and money investigating who spent what’.

These administration and expense associated tasks fall to management personnel within the business, the survey found. More than half the sample (61%) said that on average they were personally spending more than two hours a week on expense or financial management tasks. A further 30% of those decision makers also revealed to spending more than four hours completing these tasks.

“Many SMEs today may be able to get a clear picture of their business spend at the end of every month but they are really struggling to achieve this on a daily, let alone a near real-time basis.  Not only is investigating time-consuming for people who should be focused on the core business, the slow nature of the process also means it becomes difficult to get an immediate insight into  cashflow,” adds Ferguson.

Finally, almost half of respondents (44%) regard ‘access to cash flow to make payments’ as one of the main financial challenges facing small to middle market businesses today. Just over a third (38%) of the sample cited ‘paying operational expenses’ as the biggest issue.