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More SMEs in profit and planning to grow, monitor finds

SMEs report encouraging signs in BDRC's latest Finance Monitor

THE NUMBER OF SMEs in profit has risen over the last quarter, while half are expecting growth over the coming year, according to BDRC Continental’s SME Finance Monitor.

Around 69% of SMEs in Q1 2014 reported making a profit in their previous 12 months trading, up from 64% in Q1 2013, while there was a decline in the number of SMEs with a “worse than average” risk rating, down from 56% in Q2 2013 to 47% in Q1 2014.

Indeed, the proportion of businesses reporting an injection of personal funds in the previous 12 months has declined over time. In Q1 2014, 30% reported having made such an injection. 15% said that they felt they “had to” inject funds. This proportion has declined somewhat over time from a peak of 26% in Q3 2012.

Approximately eight in ten reported they are content with their finance arrangements, up from around two-thirds in 2012 and 2013.

Shiona Davies, director at BDRC Continental, said: “The encouraging news from this latest research is that the economy is seen as less of a barrier by SMEs, more are profitable and almost half (45%) are planning to grow in the next 12 months.

“Looking forward, 12% of SMEs plan to apply for new or renewed facilities and they have improved confidence that their bank will agree, although the Perception Gap – between expectation of success and the actual numbers who get external finance – still exists. We are not currently seeing any increase in appetite for external finance, with most SMEs (72%) meeting our definition of a ‘happy non-seeker of finance’ for the next three months.”

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