According to findings published by Experian®, the global information services company, a quarter of small and medium sized enterprise (SME) directors have used personal finance sources of funding including mortgages, credit cards and savings accounts to support their business.
Experian surveyed a range of SMEs to better understand how they fund business ventures. Of those that had used personal finance, almost a third had used personal mortgages – and thus put their homes at risk – to fund their business while 47 per cent of SME Directors said that they rely on high-interest personal credit cards for everyday business affairs.
Personal bank accounts are also frequently used by SME Directors with two thirds (65 per cent) stating that they have drawn on funds directly from their current account and nearly half (48 per cent) saying that they had dipped into their personal savings.
The Experian study also looked at the type of financing used to fund investments of various values and found that the majority of investments over £10,000 were funded using personal mortgages and savings.
Ade Potts, Managing Director, Experian’s SME business, UK&I, said: “This research shows that SMEs are becoming increasingly resourceful when it comes to funding and are using a variety of different financing options that are available to them to set up or expand.
This is evident with the work we do with our clients. With SME’s there is certainly a focus on ROI with programmes concentrating on deliverable outcomes. With this research it becomes clear why this is the case given the Directors often personal exposure and commitment to future investment.
Click here for more information on this research