We’ve all been guilty of the odd credit card mix-up from time to time – it happens! But if you’re consistently relying on a personal credit card to pay your business expenses – like 4-in-10 SME owners – then it’s probably time to explore other funding options.
The past 18 months have been tough for a lot of businesses around the country – I’m sure you don’t need us to remind you of that.
As such, 2-in-3 businesses (66.1%) are trying new funding options to help them build their way out of the pandemic, according to a poll of 1255 small businesses by SME non-bank lender ScotPac.
That’s a rapid rise from the start of 2021 when only 46% were introducing new funding.
The top three reasons SMEs have for seeking new funding sources are to buy plant and equipment (57.5%), improve cash flow (40.6%) and pay down debt (34.3%).
But one worrying stat caught our attention
When asked what new types of funding they had introduced over the past year to keep their business moving, more than half the SMEs (55.4%) said they turned to owner funds, with 42.5% relying on personal credit cards.
You know the old saying “you shouldn’t mix business with pleasure”?
Well, this is one of those times.
It’s very likely there are much more suitable options available for your business that will help you separate your business and personal expenses, and make it easier for you to forecast your cash flow – to name just a couple of good reasons.
“We’d encourage business owners, particularly if they are relying on personal credit cards, to seek professional advice about more sustainable funding options,” says ScotPac CEO Jon Sutton.
Other common (and likely more appropriate) types of new funding that SMEs have turned to over the past year include asset and equipment finance (38%) and government stimulus funds (27.6%).
Demand for invoice finance as a new source of funding has also more than doubled since 2018 to 16.3% – not far behind the percentage of businesses taking out a new overdraft (20%).
Want to explore new funding solutions for your business?
The SME finance space is constantly evolving – and we make it our business to make sure we stay abreast of the new funding options and players that can help your business.
So if you’re in need of finance for your business, but don’t know where to start, get in touch today.
We’d love to run you through the growing number of funding options available for SMEs just like yours.