A business that focuses on debt and other forms of capital for SMEs says a survey reveals the uncomfortable truth about the state of financing for such businesses.

A survey of 411 UK SMEs, brokers and advisors by Manchester-based Praetura, a debt and capital provider, shows that three in five (59 per cent) of them say it is harder to get funding than it was five years earlier.

Accessing funding is the one of the greatest difficulties that firms face, according to 43 per cent of the small businesses surveyed by Praetura. This follows rising costs (68 per cent) as businesses’ biggest challenge. With only 24 per cent reporting that business development was holding them back, UK SMEs are suggesting that servicing demand is their biggest challenge, not creating it.

The findings come at a time when, after more than a decade of very low interest rates, higher borrowing costs are taking an effect as central banks seek to curb inflation. SMEs tend to be the backbone of economies, and their growth is part of the eventual production of liquidity events that wealth managers follow.

In other details, fresh capital is at the forefront of firms’ growth plans, with 71 per cent reporting that they are looking for funding to accelerate expansion. But SMEs have reported frustration at not being able to secure the capital they need: 73 per cent say that institutional lenders have failed to take the time to understand their businesses.

Praetura has issued a report, Fund the Gap: Financing Futures for UK SMEs, which analyses the state of the funding landscape for UK SMEs. 

“There are some hard truths that we all must face when it comes to UK SMEs accessing finance – the vast majority of SMEs are struggling to grow at a meaningful rate,” Dame Teresa Graham, chair of the SME advisory group at UK Finance, said.

This publication has interviewed Praetura about its business model.