Business and finance terminology stops almost half of UK SMEs applying for finance

With a number of the UK’s five and half million SMEs facing uncertainty after last year’s Brexit vote, and official reports showing that over £26 billion is owed to small firms across the country, nearly half say they have been deterred from applying for finance simply because of the terminology used.
Research by LDF , a independent provider of SME finance solutions, shows that 47.8 per cent have been put off from applying for business finance, with 33 per cent not understanding the term CAPEX, closely followed by ROCE (31.4 per cent) and Ebitda (30.4 per cent) as the least understood terms.
Elsewhere, however, HP is more familiar to small business owners, alongside asset finance, with just 14.4 per cent and 14.2 per cent respectively not understanding what they mean.

SMEs need to learn terminology

Across the UK, it is SMEs in the East region (57.1 per cent) who are most likely to be put off while those in the South West (70 per cent) are the most comfortable with the terminology and range of acronyms. Plymouth SMEs in particular deal with the terminology best, well over 80 per cent say they haven’t been put off.
‘It’s disappointing, but perhaps not surprising, that nearly half of UK SMEs are put off applying for finance by the terminology used,’ says Peter Alderson, managing director of LDF.
‘For many, running a SME is a challenging, all consuming activity, so complicated financial jargon and acronyms are just extra barriers in the way of their success.
‘At LDF, we are committed to making not just the terminology of finance, but access to it, as easy, quick and trouble-free as possible.’
The willingness to deal with financial terminology for SME owners is also impacted by gender, age and size of the company. Women are far more likely than men to be put off by finance terminology, just over 53 per cent say it’s the case against 44.5 per cent of men.
When considering the size of the SMEs, it is those with between 50-99 employees who find business and finance terminology the most off putting (56.8 per cent), a sharp contrast to those enterprises with up to nine employees (32.4 per cent) and a workforce of between 10-49 employees (35.3 per cent).
‘The point at which a larger number of SME owners are suddenly put off by business and finance technology is an interesting one,’ says Alderson.
‘There seems to be a tipping point, at which the companies really start to grow, and there is often a need for additional finance, but the language used doesn’t encourage people to apply, potentially hindering their expansion.’


This news is published by: smallbusiness.co.uk
Author: Owen Gough
Learn more visit their website.


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