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    UK Finance flaws fail British start ups

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LDF Blog

They are the backbone of our British economy, but a survey by LDF has found small businesses are being failed by antiquated financial process, with funding issues cited by 30% of SME owners as the biggest barrier to starting or growing a business in this country.

Key Findings

Funding topped the list of difficulties people faced when setting up a new business (30%), closely followed by insufficient capital (29%) and too much red tape from their finance provider (25%). A survey of 850 SME owners/decision makers by LDF, the UK’s largest independent finance provider to SME businesses, revealed that many had to find the funds themselves, with no financial organisation supporting them, either through their own savings (42%), or clubbing together with friends and family (24%), with 52% criticising the British banking system for not being “business friendly”.

When the “dream” of becoming your own boss becomes a reality, over a quarter of business owners (25%) even say goodbye to a regular monthly salary due to cash flow issues with HR SME owners most likely to go unpaid (56%). Indeed, a concerning one in ten UK businesses said financial ‘blocks’ almost led to them closing down (10%).

The average requirement of funding to get a business set up in the UK is a cool £27,520, so funding is a burning issue for the budding business.  Manchester businesses require the biggest cash injection on average (£44,733) whilst Newcastle start-ups only require an average of £17,008.

SME Map of BritainThe research also highlights which UK regions are leading the way in their sectors (see map opposite). Of the cities surveyed, Liverpool is the education leader with 12% of start-ups in this sector, whereas Southampton comes top for IT (18%) and Edinburgh and Newcastle for finance (10%). Cardiff leads the way in manufacturing with 18% of its SMEs focused on manufacturing. Arts and culture is flourishing in Bristol (10%) and professional services is big business in Southampton (18%)

Interestingly, almost one in 10 (9%) of SMEs think location played a vital role in the success of their business. Rental costs can be a main determinant in choice of location with Belfast (46%),  Liverpool (36%), Cardiff (34%) and Leeds (32%) all citing this as a reason for their address choice, with 31% of Londoners (with some of the highest rates in the country) citing it too.  Low rental costs were less of a factor for SMEs in Bristol (20%), Southampton (14%) in choosing where to operate. 

Peter Alderson, Managing Director at LDF, commented: “Over 99%* of private sector firms in the UK are made up by small to medium-sized businesses and whilst this sector is clearly thriving, our survey sheds light on the harsh financial realities faced by start-ups and established businesses alike.

“With over half of SMEs (52%) stating that they do not find banks to be business friendly, many experts cite that small to medium-sized business owners are instead turning to alternative finance options as it helps people spread the cost of business investment and expenditure.”


At LDF we do our best to make finance easy and uncomplicated for our customers. We can provide solutions for a broad number of requirements whether tangible equipment (Asset Finance) or intangible growth requirements or cash flow (Business Loans). LDF have a strong history in providing finance and leasing solutions whether directly to businesses or via equipment manufacturers and resellers with whom we partner. Download our guide to Selecting the Right Finance to learn how LDF can help your business grow.
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*Figures from Department for Business Innovation & Skills, October 2015

Why choose LDF?

  • No red tape, so you can receive funds in as little as 24 hours
  • We accept 4 out of every 5 applications
  • Apply quickly and easily with E-sign loan documents
  • You’ll always speak to the same person
  • Free up cash flow for other areas of your business
  • Enjoy tailored finance agreements to suit your specific needs
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We could not have been happier. Banks as usual were a nightmare - they took over six weeks to eventually refuse for vague reasons unexplained. LDF were professional, helpful, friendly, and best of all, fast.

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