Three quarters of UK small businesses have been left thwarted by banks when trying to access funding, according to independent research commissioned by FinTech lender Capital on Tap. 

The study revealed that almost half (48%) of UK small businesses have been left waiting for more than two weeks to receive a funding decision from banks, while more than a quarter of firms (27%) have had funding requests rejected outright.

The research discovered that access to funding was especially difficult among smaller and micro businesses. Over two fifths (43%) of sole traders have had funding requests rejected while 44% of organisations with 10-49 staff experienced the same fate. 

David Luck, CEO and founder at FinTech Capital on Tap, said: “It’s clear that banks are denying small businesses the chance to fulfil their growth opportunities. Typically, smaller businesses have limited access to credit so the importance of having a facility that can provide a quick cash injection to invest in equipment or make the most of a busy trading period is essential to stability and future growth.”

The research also revealed that there is a strong diversity in the types of credit that businesses are looking to secure. The most popular funding application was for term loans (51%) with overdrafts (28%) and business credit cards (19%) also being very popular options. Out of those companies that had sought funding in the past five years, the majority (35%) had been looking to secure relatively modest amounts of funding, generally under £5,000.

“What we see from the study is that businesses are generally looking for small, flexible credit facilities, whether at times of need or opportunity. This is exactly where banks struggle to service the millions of SMEs in the UK as they are geared for consumers or large corporate clients. The next generation of entrepreneurs expect the flexibility and quick service from banks that they can attain in their personal lives, which includes easy access to funding. We are seeing the success of alternative lenders in the UK because there is a clear demand for this type of fast, transparent service.”