New figures from the Bank of England reveal that small businesses have had their overdrafts cut at a rate of £5m per day since 2011.
Additionally, a survey produced by online alternative finance platform, Funding Options, details that around 17% of SMEs have reported that their overdrafts were removed completely in the last two years, with of 30% also experiencing extra reductions imposed.
Our Managing Director, Peter Alderson says increasingly, we are seeing evidence that SMEs are unable to rely on traditional overdrafts as a working capital tool.
Without an overdraft facility, small businesses could be vulnerable especially when it comes to unexpected high bills or dips in sales, and could potentially lose out on opportunities to expand or improve their business.
There are however, other alternative funding options available to SMEs who are unable to access finance through traditional bank lending.
Peter adds that small businesses can sometimes be unaware of the range of finance options available to them, but with banks still reluctant to provide working capital to SMEs, and more are starting to consider alternative funding solutions.
This is especially true for seasonal businesses who may struggle if overdrafts are withdrawn or reduced during peak seasons.
LDF offer unsecured loan products which can help spread the cost of key expenditure including: income tax, corporation tax and VAT liabilities.
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