More SMEs in profit and planning to grow, monitor finds

by Calum Fuller

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29 May 2014

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THE NUMBER OF SMEs in profit has risen over the last quarter, while half are expecting growth over the coming year, according to BDRC Continental's SME Finance Monitor.

Around 69% of SMEs in Q1 2014 reported making a profit in their previous 12 months trading, up from 64% in Q1 2013, while there was a decline in the number of SMEs with a "worse than average" risk rating, down from 56% in Q2 2013 to 47% in Q1 2014.

Indeed, the proportion of businesses reporting an injection of personal funds in the previous 12 months has declined over time. In Q1 2014, 30% reported having made such an injection. 15% said that they felt they "had to" inject funds. This proportion has declined somewhat over time from a peak of 26% in Q3 2012.

Approximately eight in ten reported they are content with their finance arrangements, up from around two-thirds in 2012 and 2013.

Shiona Davies, director at BDRC Continental, said: "The encouraging news from this latest research is that the economy is seen as less of a barrier by SMEs, more are profitable and almost half (45%) are planning to grow in the next 12 months.

"Looking forward, 12% of SMEs plan to apply for new or renewed facilities and they have improved confidence that their bank will agree, although the Perception Gap - between expectation of success and the actual numbers who get external finance - still exists. We are not currently seeing any increase in appetite for external finance, with most SMEs (72%) meeting our definition of a 'happy non-seeker of finance' for the next three months."

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