SMEs are opting to use personal funding and asset finance ahead of traditional bank funding according to the results of a survey by Close Brothers.

The quarterly business barometer survey, which canvasses the opinion of 500 SME owners and managers throughout the UK in June, showed that almost a fifth of firms depend on personal finance, making it the most commonly used method of business funding, closely followed by asset finance which is the main form of funding used by 17% of those surveyed.

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15% of firms polled said they rely on bank loans while a further 15% prefer to use a bank overdraft.

Chief executive officer of Close Brothers Asset Finance, Mike Randall, said: "It’s interesting to find that so many small and medium sized firms are relying on personal finance to fund their business given that bank lending was traditionally the main source of finance for most companies and there are so many other viable ways to fund your business without drawing down on your own finances.

"We found that more firms are opting to use asset finance than either bank loans or overdrafts, signalling a shift in SME attitudes towards finance which appears to be moving away from traditional reliance on bank lending."

The barometer also revealed that 42% of SMEs consider accessing finance to be a challenge and a further one in 10 are not confident that they will be able to access the funds they need for investment in the next 12 months.

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Randall said: "These figures clearly show that access to finance remains one of the main challenges facing the SME sector. We would urge all businesses to widen their search and consider all the means of funding available to them.

"Asset finance is a sustainable and flexible form of funding that allows firms to either purchase new assets or unlock the capital tied up in their existing assets, providing a cash boost that can be reinvested back into the business."