According to a report by BDRC Continental (bdrc-continental.com), SMEs are still reluctant to use external finance.

The research agency’s latest quarterly SME Finance Monitor, based on more than 100,000 interviews, reveals that many SMEs prefer to self-fund through retained profits, credit balances or trade credit.

BDRC Continental director Shiona Davies said: “While optimism across the SME sector as a whole remains buoyant, SMEs that trade internationally are increasingly concerned about the economic climate and political uncertainty.

“For SMEs that both import and export, the number concerned about political uncertainty increased from 8% in 2015 to 32% in the fourth quarter of 2016.

“In addition, 5% of SMEs applied for a new or renewed loan or overdraft facility in 2016 — the lowest level since the Monitor began in 2011, reflecting SMEs’ continued reluctance to use external finance.”

However, BDRC Continental said this does not seem to be due to a lack of confidence. More than 60% of SMEs are confident that their bank would agree to a request, while 80% of those that do apply are successful.