Missed Opportunities: Restrictive Finance Holds Businesses Back

  • Two thirds of businesses missing out on opportunities due to overdraft limits and restrictions. 
  • A third of businesses unable to seize growth opportunities. 
  • Majority of businesses unhappy with size, flexibility or reliability of available overdrafts.

Almost two thirds (61%) of businesses believe they are missing out on business opportunities as a result of restrictive or inflexible bank overdrafts, according to new research from ABN AMRO Commercial Finance.

ABN AMRO Commercial Finance Managing Director, Peter Ewen, comments: “Now is the time for businesses to embrace growth opportunities and push our economy forward, yet too many are finding themselves unable to do so because of restrictive financial arrangements.”

Financial constraints

When asked about their overdraft facilities, flexibility of funding appears to be the main issue for businesses. The majority (86%) say their facility lacks flexibility, while 87% say they find the size of their facility restrictive. A similar proportion (88%) feel constrained by overdraft charges.

As a result of these restrictions, businesses are being discouraged from taking on new customers (73%) and making investments (71%). Three quarters (75%) are also missing out on opportunities to expand or grow.

The overdraft facilities that are currently available to businesses in the UK are not supporting growth, according to half (52%) of business leaders.

Worryingly these restrictions are also affecting business’s ability to react to opportunities. If an opportunity to invest in growth came along today, a third of businesses (32%) feel they would be unable to seize it in their current financial situation.

Lack of support

As well as the restrictions placed on facilities, businesses are worried about a lack of support from providers.

More than four fifths (84%) of businesses find their overdraft unreliable and two thirds (64%) say they lack support from their bank with regards to their overdraft.

Two fifths (41%) of businesses say overdrafts are harder to secure than this time last year. A similar proportion (43%) find overdrafts are more difficult to access than they were pre-recession (2008).

Because of this, more than a third of businesses (34%) say they have now lost faith in traditional sources of finance.

Foundation for growth

However, businesses say if they had reliable funding, they would be more positive about their prospects. With access to more flexible funding, companies would be more able to grow, say two fifths of businesses (41%). Not only this, but 44% of businesses believe they would be more successful, too.

Nine out of ten (89%) respondents 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 comments: “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.”


Further information

For further information or an interview with Peter Ewen, please contact:
Xenia Kingsley or Lauren Greatorex at Man Bites Dog
0844 561 1416

About the ABN AMRO Commercial Finance study

The research was conducted amongst 250 SME owners, managers and financial controllers by Coleman Parkes on behalf of ABN AMRO Commercial Finance. The research was conducted online in the second half of 2012.

About ABN AMRO Commercial Finance PLC

ABN AMRO Commercial Finance is an award-winning Invoice and Asset Based Lender and part of the ABN AMRO Commercial Finance Group. Established in 1989, the company provides Factoring, Invoice Discounting, Export Finance, Structured Finance, Asset Based Lending and numerous related services to start-ups through to 500m turnover organisations. Providing consistent support via its 200+ staff and 11 regional offices, ABN AMRO Commercial Finance helps clients manage working capital, refinance, restructure, fund business opportunities and expansion, purchase new equipment and finance M&As.

About the Overdraft Scrappage Scheme

ABN AMRO Commercial Finance launched a £250m Business Overdraft Scrappage Scheme in November 2012. The scheme has made £250m worth of funding available to encourage SMEs to scrap their overdrafts in favour of invoice finance.

Under the scheme, SMEs are able to trial a finance facility for 6-months with no-commitment to determine whether it is right for their business.

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