A survey of 850 SMEs has revealed the average amount needed to start a business in the UK today is £27,520.
The report by LDF shows Manchester is the most expensive place to start up. Newcastle was the most cost-effective, with most owners there borrowing £17,008 to get off the ground.
Regardless of location, nearly one in three SMEs across the country were in agreement that funding was the biggest challenge they faced when starting out (30%), with over half saying banks are not business friendly (52%).
In order to raise funds to set up their business, nearly half had to use their own savings (42%), and almost a quarter sought financial help from friends and family (24%).
Many small businesses are still unaware of the non-bank funding options available to them. However, between 2012 and 2014 finance by SMEs from non-bank funding rose from £267m to £1.74bn according to Nesta, the innovative charity with a mission to bring great business ideas to life. The rise in funding shows that SMEs are now welcoming alternative options to help fund their business and grow.
"We struggled to finance the operation previously as banks just didn’t understand our concept. The investment from LDF certainly had a positive impact on turnover and performance as it is up 14% compared with last year. It’s mainly down to the fact that we were able to provide a better delivery service by having two vehicles servicing our customers rather than one. We can now cover the whole of North Wales in 24 hours and have recently taken our first account on in England too. I’d really recommend entrepreneurs who are struggling to get to that next stage to consider asset finance because it can really help a business to reach its goals.” - Joe, Managing Director and Part Owner of Parisella's