Growth within UK firms is being ‘stifled’ by a lack of funding, according to research from corporate bank Close Brothers.

Statistics from the quarterly Close Brothers Business Barometer claimed 42.2% of SMEs across the UK will seek funding to finance growth in the next 12 months.

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However, nearly 55% of those companies are unsure how to fund this growth and more than half are concerned their request for bank loans will be turned down, according to the research.

Brian Dhenin, managing director of the broker division at Close Brothers Asset Finance, urged SMEs to seek alternative funding methods and added: "Over the last few years, asset finance has become increasingly popular, however there is still a lack of awareness surrounding it that may be holding UK firms back from realising their growth aspirations."

Lower cost rises for SMEs

Dehnin’s call came as UK bank Aldermore suggested now was the time for UK companies to invest as it highlighted a fall in cost inflation for SMEs.

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The figures, published in Aldermore’s quarterly SME Cost Inflation Report, showed that costs for SMEs are now rising at the slowest rate since 2009, driven by a fall in legal and financial services costs.

Mark Stephens, commercial director at the Aldermore Group, said: "Cost inflation falling to its lowest level for nearly four years is a tremendously encouraging sign for SMEs across the country, and could provide a stimulus for many business owners to kick on and drive expansion in their business."

Close Brother’s survey mirrored results from a Siemens Financial Services survey which showed supply chain manufacturers are struggling to access bank lending, while research from ABN AMRO Commercial Finance found 69% of SMEs were looking to grow over the coming one to two years but that almost half were finding those plans difficult to fund due to costs.