UK SMEs are sitting on £770 billion in untapped assets

British SMEs own £770 billion in assets – equivalent to 48 percent of the UK’s GDP – and are owed £291 billion in outstanding invoices that they could use to fund future growth, according to new research published today by Lloyds Bank Commercial Banking.

Although businesses are becoming more confident about investing in future growth, and although many are aware of invoice financing as a possible form of lending, very few businesses have used it to drive growth in the past 12 months.

Invoice finance can help businesses release cash quickly, giving them access to up to 90 percent of the value of their issued invoices, often within 24 hours.

Donald Kerr, Managing Director of Lloyds Bank Commercial Finance, says our research found that more than half (52 percent) of SMEs are more confident about investing in growth this year than they were 12 months ago:

“Despite this SMEs are missing out on the opportunity to recruit new staff, break into new markets or develop new products because they are not harnessing the full range of funding options available that could unlock the value in their assets or invoices to help them grow.

“As a result, businesses are turning down contracts that they think they cannot afford to fund and are holding back their own growth potential.”

While almost half (49 percent) are aware of invoice financing, and around a third (36 percent) are aware of asset-based lending, only one in 11 businesses (nine percent) has used invoice financing in the past 12 months, and even fewer (five percent) have used asset based lending.

In contrast, far more businesses have used an overdraft in the past year (24 percent), while almost one in three (32 percent) have used a loan.

“If they had access to the funds, more than a third of businesses (38 percent) want to take on new staff, almost as many (31 percent) to break into new markets, while more than a quarter (27 percent) would look to develop new products.

“This is positive news and suggests that businesses recognise the opportunities that are out there for them in the recovery.

“But despite the fact that even the average SME is owed almost £60,000 in unpaid invoices – and that for one in nine (11 percent), those outstanding bills are worth more than £200,000 – even those businesses who are aware of different finance options appear not to understand them enough to take advantage of them.”