Less than 1 in 5 North West SME's say their High Street bank understands their business challenges

JUST 18% of SME's in the North West feel their high street bank fully understands the specific challenges of their business, according to Close Brothers Group's quarterly business barometer of 900 UK SME's.

Close Brothers research revealed that SME's in the North West were concerned that their high street bank was not well enough equipped to offer bespoke advice and support for their business, with just 26% saying that they offered a range of products suitable for their business.

The research revealed that only 23% of North West SME's thought that their high street bank was able to meet their funding needs. A recent report from Close Brothers, The Power of Productivity: Measuring, understanding and improving productivity for SME's found that just 41% of UK SME's accessed funding through their chosen source of finance last year, and 34% felt that it wasn't enough for their investment plans.

Having access to the right finance is imperative for SME's to grow their business, but the latest barometer results suggest that high street banks are lacking the specialist knowledge needed to support small businesses. Many SME's are unaware of all the finance options available to them and will therefore go to the biggest banks as the 1st port of call when looking for finance. With the high street bank rejection rate for 1st time borrowers at 50%, and a third of SME's reportedly giving up after their 1st rejection for funding, this is a big cause for concern.

In addition to many SME's giving up after rejection from high street banks, those who do go on to access finance often opt for the wrong type of products. This product unsuitability may put them at risk and hinder their growth. For example, an SME may choose an overdraft to finance new equipment or technology and run the risk of the bank being able to withdraw the facility at any time, leaving little or no time to repay the money.

Credit card use is also prevalent among SME's, with 47% using a personal card for business purposes and, whilst the majority will pay their card off regularly, this need for short term finance could put businesses at risk should the interest accumulate.

Owners of small businesses and start-ups will also often choose to use their own personal savings to help fund growth, particularly if they don't yet have significant assets to leverage. Close Brothers research found that 1 in 8 medium sized SME's were still using personal savings for finance. This would suggest that SME's aren't being given the appropriate advice for when they are trying to grow.

Adrian Sainsbury, Banking Division Managing Director of Close Brothers Group plc comments:- "SME's need to receive the right support, particularly when it relates to financial decisions, and this research suggests that high street banks may not always be the best option. Every small business is unique and their challenges and requirements vary considerably. They rely on advice and support on how best to deal with their specific finance needs and this is where a lender with the relevant specialist knowledge and experience is invaluable. Explaining the options available, providing funds and helping overcome issues are all areas where the right finance provider can make a real difference. Working with lenders who understand and recognise the importance of the SME market is always likely to result in a better outcome."