SMEs feel trapped by lack of financing options.

Majority of SMEs dissatisfied with bank lending schemes

In its 2015 Small and Medium Business Landscape report, Digital Finance Analytics (DFA) reports that two in every three small business owners are unhappy with their bank.

Almost 75 per cent of enterprise owners surveyed would be willing to switch banks if it was in their business's interests, but only 60 per cent of these people go through with the change.

The last quarter of those firms that would not be willing to switch are made up of people who are satisfied with their current bank, or those who consider all banks to be much the same and thus find no point in switching.

Another major reason could be the perceived difficulty of switching banks without the aid of a business development consultant.

This new information reveals a startling lack of confidence in major banks, suggesting a widespread view that dissatisfaction with banking is simply part of owning a small business.

What do people want in a bank?

As part of its investigation, the DFA also questioned participants about the main drivers of their custom towards certain banks. Results showed that the biggest driver was that of whether they felt the bank was knowledgeable of the needs of small businesses.

This rated far higher than general brand association and reputation. 

This poor service may be driven by the fact that small businesses are considered potentially dangerous investments for banks, as half of those businesses will fail within five years of starting up. Most heavily affected are those in the IT, transport and financial services sector, while those in food, accommodation and healthcare are more robust.

Of those that remain, it was found that roughly 20 per cent of small businesses financed by banks make up to 80 percent of the bank's profit.

This report highlights a distinct disparity between the expectations of small business owners and the practices of banks. The DFA report summarises its findings by stipulating that there is "significant opportunity" for lenders willing to cater fully to SMEs.