Various factors are limiting SMEs' access to funding, according to the Institute of Chartered Accountants in England and Wales (ICAEW).

While funding is a "key determinant for growth" for SMEs, low awareness of finance options among business owners and poor economic conditions act as a barrier to accessing all-important funds.

Higher inflation rates also mean that businesses are facing steeper borrowing costs compared to a few years ago. A recent British Business Bank survey found that 20% of small firms are concerned about their ability to repay their loans on time.

Meanwhile, just 37% of SMEs found the process of applying for traditional loans easy, according to a report from the Federation of Small Businesses in December 2022.

The ICAEW proposed several measures to help ease finance pressures and boost awareness of funding options for smaller firms, including the ICAEW's business finance guide and open banking technologies to help address funding gaps.

Simon Gibbs, financial services, banking and insurance manager at the ICAEW, also called for increased Government support.

According to Gibbs, initiatives such as tax credits or enterprise zones could also help small firms grow in the short term so banks would be "more willing" to provide further financial support in the long term.

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