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June 25, 2013updated 12 Apr 2017 4:02pm

SMEs missing out on growth due to ‘restrictive’ overdrafts – ABN AMRO

Almost two-thirds (61%) of UK SME businesses believe they are missing out on opportunities to grow due to restrictive or inflexible bank overdraft lending, according to research conducted by ABN AMRO Commercial Finance.

By Verdict Staff

by Sophie Exton

Almost two-thirds (61%) of UK SME businesses believe they are missing out on opportunities to grow due to restrictive or inflexible bank overdraft lending, according to research conducted by ABN AMRO Commercial Finance.

The research found that 84% of businesses felt their overdraft was unreliable and 64% said they lacked support from their bank with regards to their overdraft.

When asked if an opportunity to invest in growth arose today, 32% of businesses said they feel they would be unable to seize it in their current financial situation while three-quarters said they had missed out on opportunities to grow. As a result, 34% said they had lost faith in traditional sources of finance.

Nine out of ten respondents to the survey, conducted in late 2012, said they would improve cash flow and working capital if they had a bigger overdraft while 80% would use it as a safety buffer against a worsening economy.

Peter Ewen, managing director of ABN AMRO Commercial Finance, said: "Businesses have realised that overdrafts are no longer fit for purpose and are, in fact, restricting their growth.

"Many have fallen out of love with their facility providers and are looking for more sustainable finance partners. With more reliable funding in place, UK businesses will have a real opportunity to succeed."

In November 2012 ABN AMRO launched their Business Overdraft Scrappage Scheme which made £250m (€294m) worth of funding available to SMEs to encourage them to scrap their overdrafts in favour of invoice finance.

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