Businesses Using Credit Cards for Financing

Santander survery reveals that British businesses are using personal credit cards for their financing.

Personal credit facilities such as credit cards and personal loans have been used by one in eight (13%) senior decision makers at SMEs in the UK for financing their firm over the past 12 months, according to new research from Santander Corporate & Commercial.1

The SME Access to Finance study of 683 senior decision makers at UK businesses also found that one in four (25%) had also relied on overdraft facilities over the past year.

This is especially common in the North East where 26% of SMEs said they had used personal credit facilities as financing for their businesses – more than double the national average.

Santander Corporate & Commercial’s study also found a number of firms – some 8% – also admitted they had never reviewed their finance requirements with a view to financial stability or to assess how much money is required to execute new projects.

Cash flow fears
More than two-fifths (43%) of businesses said they were concerned or very concerned about cash flow over the next 12 months.

The biggest problem, experienced by a quarter (25%) of SMEs, was late and failed payments from customers but, despite this, just 5% said they had used invoice financing in the past 12 months.

Cash flow worries are most prevalent in London, where nearly two fifths (38%) of business managers were either concerned or very concerned about their cash flow in the next 12 months.

Mike Reeves, Joint Managing Director of SME Banking at Santander, said: “It’s worrying to see that many of Britain’s small firms are relying on personal credit facilities to finance their businesses, and are concerned over effectively managing cash flow. If businesses are experiencing problems with late or failed payments, then the simple answer is invoice finance. It’s a tried-and-tested method of unlocking the value of unpaid invoices, providing companies with immediate access to their money.

“SMEs are the lifeblood of the UK economy, helping to create jobs and drive local economic growth. Santander Corporate & Commercial knows that and, as a scale challenger, we bring a unique approach to help all UK businesses achieve their growth ambitions.”

Meeting business needs
Santander Corporate and Commercial has developed a comprehensive range of products and services to help SMEs manage cash flow effectively and secure long-term funding.

The bank’s Breakthrough programme includes its Growth Capital lending programme which offers a highly differentiated service for fast-growth, ambitious businesses.

In addition, Santander Corporate and Commercial’s pioneering referral partnership with peer-to-peer firm Funding Circle is evidence of the bank’s commitment to SMEs whatever their financing and funding needs.