Tech SMEs strive for growth despite challenges

Over half of tech SMEs that are trying to attract funding are focussed on encouraging growth over safety nets, according to a UK report, despite the tough economic climate.

According to a recent survey from UK B2B funding firm Growth Lending, SMEs are continuing to weather the storm with just 4% seeking funding to put contingency plans in place to battle the “cost of doing business”.

“It is positive to see that many tech SMEs are still operating with a growth mindset and raising investment to support their plans,” said Lauren Couch, managing director of Growth Lending.

Yet, in the same survey, it also suggested 17% of tech SME’s are requesting funding to cover increased overheads amid rising costs. And, with 43% of tech SMEs experiencing late payments on a regular basis, it is possible that many are raising additional funds to create a cash buffer to mitigate the impact of overdue invoices on the business.

“Caution remains,” warned Couch. “The ongoing economic situation and the forecasted impact of recession are likely to cause many lenders to retreat.”

However, the MD added that rather than being perceived as a means to strengthen and reinforce cash flow in challenging times, it is clear that many still associate certain types of funding with weakness and vulnerability.

“There are a wide range of lending products available to support SMEs and help them to survive – and thrive –  whether businesses are looking to unlock the cash tied up in their debtor book, improve cash flow overall, or accelerate growth strategies.”

Yet what is clear to be less of a reason for seeking funding is employment (8%), and fears around the current trading environment are holding 37% of SMEs in the sector back from raising external investment altogether.

This could be contentious since a separate report noted the need for businesses to not only nurture their current talent but also curate a comprehensive onboarding process to attract new staff.