UK SMEs are sitting on £770bn in untapped assets that could be used to fund growth, Lloyds Bank Commercial Banking suggests.
Research by the bank found that British SMEs own £770bn of assets, which is equivalent to 48% of the UK’s GDP. But they are also owed £291bn in outstanding invoices that they could use to fund future growth.
Lloyds noted that although businesses are becoming more confident about investing in future growth and have often heard of invoice financing, few have used it to drive growth in the past 12 months.
The research found that almost half of UK SMEs (49%) are aware of invoice financing and around a third (36%) know about asset-based lending. But just one in 11 businesses (9%) has used invoice financing in the past 12 months. Even fewer (5%) have used asset-based lending.
In contrast, 24% of businesses have used an overdraft in the past year, while almost one in three (32%) have used a loan.
Donald Kerr, managing director of Lloyds Bank Commercial Finance, said: “Our research found that more than half (52%) of SMEs are more confident about investing in growth this year than they were 12 months ago.
“Despite this, SMEs are missing out on the opportunity to recruit new staff, break into new markets or develop new products because they are not harnessing the full range of funding options available that could unlock the value in their assets or invoices to help them grow.”
Kerr added: “If they had access to the funds, more than a third of businesses (38%) want to take on new staff, almost as many (31%) to break into new markets, while more than a quarter (27%) would look to develop new products.”
Sally Percy is editor of The Treasurer