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Transport SME’s most likely to use personal funds

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Business owners of small to medium sized transport and logistic companies are amongst the most likely to take out a personal loan for the business, new research has revealed.

The study, from Hitachi Capital Invoice Finance, shows that a quarter (25%) of operators have accessed a personal loan for the business in the past 12 months. For all 502 business owners surveyed across all sectors, personal savings was the most popular type of personal funds invested (80%).

When asked for the main reason for not wanting to borrow money for the business, 44% of those in the transport and logistics sector said they would prefer to invest their own finances into the business.

The main reason they do not trust traditional lenders, such as banks, is due to the uncertainty of Brexit (39%).

For business owners surveyed across all sectors, 35% said they try to avoid borrowing money for the business at all costs. The main reason for not wanting to borrow money is that companies want to owe as little as possible (53%), with a further one in 10 admitting that borrowing money has led the business into further debt in the past.

Andy Dodd, managing director at Hitachi Capital Invoice Finance, said: “It’s interesting to see business owners remaining cautious with regards to business funding, potentially restricting their ability to grow.

“There appears to be an ongoing negative perception of more common lenders, despite them using this option to keep their businesses funded. This shows a clear discrepancy between SMEs wanting to borrow from these types of lenders and them needing to.”

More than 20% also noted that maintaining their cash flow is a top concern for them for the year ahead, and indicates this is something they are currently struggling to manage.

Dodd continued: “It is important for business owners of any kind to be aware of the funding options available to them and what they are eligible for, as there are a number of options available to help prioritise overdue payments and maintain financial resource, particularly outside traditional lenders.”

Start-up business owners (of companies established for 12 months or less) tend to trust traditional lenders the most (28% completely trust them and 37% somewhat trust them). This is also the case for younger business owners.

More established businesses have the least trust in traditional lenders (only 14% completely trust them.)

When it comes to location, business owners based in London are the most trusting (65% do trust them) and those in Northern Ireland, the least (53% said they do not trust them.)

Top five SME business concerns for 2018:

1.Turnover (38%)

2.Brexit (28%)

3.Bringing in new customers (27%)

4.Market competition (24%)

5.Cashflow preservation (21%)

To read the full white paper report, click here

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