Four in ten (37%) small businesses that made successful finance applications last quarter used the sums raised to manage cashflow rather than invest in their firms, according to new figures from FSB’s full Q4 2019 SBI report.
Fewer than one in four (23%) used finance to update equipment, while even smaller proportions used funds for expansion of their business (16%) or recruitment (2%).
FSB National Chairman Mike Cherry said, “it’s troubling that so many external finance applications are driven by cashflow concerns. This really shouldn’t be the case – you wouldn’t dream of doing your weekly shop and telling the cashier that you’ll pay for it in 100 days, but corporations take this approach to small businesses in droves”.
In its December election manifesto, the Conservative Party pledged a new package of reforms aimed at targetting the issue of late payments. However, the government suffered another setback earlier this year with the departure of the Small Business Commissioner, due to a conflict of interest.
Speaking to SME Technology Guide at the start of the year, fintech firm Previse, revealed that analysis of over £24 billion worth of invoices showed a 30-day discrepancy between when businesses pay their smallest suppliers compared to bigger suppliers.