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SME owners rely on personal finance to fund their businesses

18 March 2016 4:44PM
One in five small and medium business owners regularly dip into their own pockets to fund their businesses, according to a new survey.Scottish Pacific's latest SME Growth Index also found that almost half of all SME owners have used their personal finances to fund their businesses on an occasional basis.Only ten per cent of SME owners have never settled business expenses using non-business sources of finance.Scottish Pacific chief executive Peter Langham said that personal finance options, such as credit cards, appealed because they were convenient but they added to cost pressures on small businesses.Langham said smarter funding options were available. Scottish Pacific is a debtor finance specialist.The survey found that SME owners did not like having to give real estate security for business finance and would pay higher interest to avoid having to do so.SME owners also have a preference for flexible lending terms, rather than standard bank term debt.Overall, SME owners are not looking for credit. The proportion of respondents who said they would use funds in the business to finance growth increased from 81.1 per cent in September 2014 to 92.7 per cent in the latest survey.

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