SMEs 'reluctant to apply for loans'

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Many small and medium-sized enterprises (SMEs) in the UK are choosing not to apply for loans, even if they feel it would be good for their business.

This is the finding of a new study by Barclays, which revealed that 39 per cent of small businesses have decided not to try borrowing money, despite feeling it might boost their prospects.

This is a relatively high proportion when compared to that across SMEs overall, as figures showed 30 per cent have opted to ignore the potential benefits and not apply for a loan.

Barclays is concerned because it believes 64 per cent of SMEs could see an increase in turnover if they managed to secure the right loan.

This, it said, would generate almost 200,000 new jobs throughout the UK during the next four years and represent a considerable economic boost.

The Barclays study also revealed that SMEs' current or future funding requirements look set to be affected by Britain's exit from the European Union.

Indeed, one in five were found to believe Brexit is either having or will have on impact on the money they require.

This is because many are looking at exporting to new markets outside the EU, while others are worried about the economic uncertainty created by Brexit.

Furthermore, a number of SMEs said they will need to replace existing members of staff who are EU citizens.

Some 12 per cent of SMEs are struggling with uncertainty of a different type, as they simply do not know if Brexit will have an impact on their business.

Nevertheless, a significant proportion (24 per cent) believe leaving the EU will make it more difficult for them to secure a loan during 2017.