Your bank: the only option?

Nowadays, entrepreneurs seeking funding for their businesses have a huge variety of options. Technological innovation could be to thank for this, with digital channels like peer-to-peer lending and crowdfunding growing in popularity over the last decade.

Having risen from the ruins of the financial crisis ten years ago, alternative finance can provide funding in uncertain times when traditional forms of financing, such as bank overdrafts, are either too expensive or not so readily available.

Our survey, conducted with over 1,000 UK SMEs, has shown that 45% of participants would first approach their bank if they were thinking about taking on new funding. But if we delve deeper into the data, particularly looking at social demographics, we can see that age plays a significant part in our respondents’ varying attitudes towards business finance.

What the data suggests

When asked who they would first approach if they were thinking about taking on new funding for their business, 71% of our respondents either said they would go to their bank or that they didn’t know. This is hardly surprising when research has shown that 83% of financial directors would approach their bank for lending in the first instance.

When we dissect our research data further, we can see that there are differing opinions across different age groups. 37% of respondents aged 45 and over didn’t know where they’d go first for finance, significantly higher than the average of 19% for those 44 and under. Similarly, over half of our respondents aged 45 and over (59%) claimed that they aren’t at all confident with their knowledge of alternative finance sources.

Does this demonstrate a fundamental knowledge gap among older respondents? Not necessarily. It seems that there is a general issue around our respondents' lack of awareness of the many options that now exist in the marketplace, no matter their age.

Younger respondents may show more willingness to experiment with different sources of finance, however. When thinking about taking on new funding for their business, younger respondents seem to be more open to alternative sources: 10% of those aged 44 and under reported that they would approach another lender, compared with a mere 2% of those aged 45 and over.

It’s also worth noting that, while being most concerned about fundamentals such as interest rates and security, 21% of our youngest participants, aged 18 to 24, expressed an interest in using the types of funding which also offer additional support, such as business advice. This compares with an average of 11% for respondents aged 45 and over.

Conclusions we can draw

When dissecting the data, we begin to get a more detailed picture of the UK funding landscape and, potentially, changing attitudes towards traditional bank-led financing. From the data, we can see that some of the significant disparities in attitudes may come down to age.

Younger respondents’ awareness of and openness to using the alternative business funding sources available to them is encouraging. However, we saw many respondents of all ages reporting that they just aren’t sure what their best path to funding might be.

Hopefully, as more alternative finance solutions come to market, UK SMEs can avoid confusion and be able to plan successfully for growth.


Our new survey, conducted with over 1,000 UK firms employing more than 10 staff, highlights the prevailing perceptions of UK businesses and underlines challenges faced by business leaders.

Read more about the results of our survey in our report. Download it for free here.

Written on in Borrowing
Content Executive