UK businesses overwhelmingly favour loans over alternative finance options, according to new research from Time Finance.
The study, conducted in partnership with Censuswide, found that 93% of businesses are aware of loans, compared to 79% for asset finance, 76% for invoice finance, and just 64% for asset-based lending (ABL).
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The disparity is even greater when it comes to usage. While 40% of SMEs currently rely on loans, only 19% use ABL products. The findings are part of Time Finance’s Finance Apathy survey, which gathered insights from 500 SME owners and decision-makers across the UK.
The results reflect a broader trend highlighted by the British Business Bank’s Small Business Finance Markets report, which found that 20% of SMEs use credit cards as their primary source of finance. Similarly, the SME Finance Monitor reported that in the three months to February 2024, the most frequently used finance products among SMEs were credit cards (17%), overdrafts (13%), and bank loans (11%).
Ed Rimmer, CEO at Time Finance, said the findings point to a lack of awareness of specialist funding solutions. “SMEs need to move away from consumer-style finance and adopt a more strategic business mindset. While loans provide vital support, alternative solutions such as invoice finance, asset finance, and ABL are designed for specific business needs and can drive growth rather than just easing cash flow challenges.”
Rimmer urged businesses to explore these alternative options, noting that invoice finance can unlock working capital, asset finance enables equipment investment, and ABL provides capital by leveraging business assets. “Many SMEs are missing out simply because they don’t fully understand the benefits of these products,” he added.
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