Lack of investment funding is greatest frustration for SMEs
Bank lending has become less of a concern
Reluctance to invest by private investors, not banks, is the single biggest source of frustration for small businesses, new research shows.
Small and medium enterprises said there most common frustration is access to investment funding, a poll commissioned by fundSME and carried out by Amarach research found.
Nearly nine in 10 SMEs found sourcing this type of investment difficult and nearly six in 10 found it extremely difficult.
Investment funding can take the form of long term debt, but for most involves equity and shareholders.
Access to working capital was the second biggest barrier for SMEs, even more so for micro-enterprises (fewer than 10 employees).
The study polled 140 SMEs employing between one and 150 employees about their growth ambitions and funding needs. The findings paint a picture of Irish businesses frustrated by a combination of financial and other barriers.
Non-financial barriers primarily related to staff or facilities. Nearly half of the firms in the poll said they had difficulty getting staff with the right talents and skills, while four in 10 faced barriers accessing suitable office or other space for their business (especially smaller firms).
Another key growth barrier was engagement with state enterprise supports. Over six in 10 SMEs found this difficult. Fewer than half of the firms felt fully informed about the different funding options available to their businesses.
The poll also revealed the role that company directors play in financing a business. Half of the firms had taken out loans from their banks (and/or an overdraft facility), rising to three out of four larger SMEs. But the second most important source of funds was directors/owners themselves: between four and six out of 10 SMEs had been part-funded by director loans, depending on the size of the firm.
Equity is another important source of finance, for under a third of firms surveyed. But other sources are nearly as important: a quarter use lease or hire purchase, and a similar proportion have availed of grant aid. About one in 10 SMEs have used invoice discounting or angel finance to fund their businesses.
Sunday Indo Business