Business Banking Insight shows today’s trends include looking closer to home for financial support and hiring a mentor…
New businesses look closer to home for financial advice and support than their most established counterparts, a new report suggests.
Younger SMEs are more likely to consider a diverse range of options, including turning to friends and family, when looking for finance or information to expand, according to the Business Banking Insight (BBI).
Forty-two per cent of those formed after 2010 would consider approaching acquaintances and relations for business investment and 64% of these would turn to their friends and family for financial guidance, says the poll, which surveyed 5,000 SMEs across the UK.
This compares to just 22% of businesses formed pre-2000 whose owners would think about using this type of finance and 45% who would ask their nearest and dearest for information.
More than a third (36%) of companies created post 2010 said they would consider peer-to-peer lending if they wanted to expand their business, compare with just 18% of firms created before 2000.
Newer businesses are also more open when it comes to considering using different sources of guidance when financing their companies, according to the research.
While just 29% of those created before 2000 would use a mentor, half (52%) of SMEs formed in the past five years would use this form of advice.
A similar amount of newer SMEs would seek out financial advice sites (56%) for information, compared with just 32% of those founded pre-2000.
Mike Cherry, Federation of Small Businesses policy director and spokesperson for the BBI, said: “The BBI can help companies of all sizes get the right finance. Accessing the best product for your business is critical to growth and future investment. The BBI should be part of that journey to allow you to see what other businesses like yours have found useful and which providers might be right for your needs.”
John Longworth, director general of the British Chambers of Commerce and spokesperson for the BBI, said:“The divide between older and newer companies in attitudes to seeking business finance and guidance highlights a change in approach by businesses’ to driving growth. The finance needed to drive growth can and should be tailored to the specific needs of each business, so it’s vital that traditional lenders and advisers adapt to meet the changing demands of SMEs.”
Business Banking Insight is an independent project which has been designed to help support micro, small and medium sized businesses to make informed decisions about which banking institutions, products and services are right for them.
The BBI project was commissioned by the chancellor of the exchequer and is supported by an advisory group that includes HM Treasury, the Federation of Small Businesses, British Chambers of Commerce, British Bankers Association, and the Department for Business Innovation and Skills.