New figures from a finance industry survey have shown that restricted cash flow and lack of bank support are the top challenges facing SMEs – but that the majority of advisers would recommend alternative finance to unlock the path to growth.

The survey of the UK’s advisory professionals’ community by alternative finance specialists ThinCats showed that the single biggest challenge facing small and medium-sized businesses in 2018 is ‘Restricted Cash Flow’, with 57% of respondents saying the companies they’re working with are being held back by a block on cash flow.

Looking a little deeper at the responses, it is not hard to see why. The lack of support from the traditional banking sector has emerged as a strong underlying cause with 49% of advisers confirming that ‘Banks Removing/Restricting Facilities’ continues to be a major problem, polling above ‘Market Uncertainty’ at 46%.

In addition, 41% of participants in the survey indicated that ‘Banks Not Lending’ is another critical issue facing businesses today. When asked ‘In what situations would you recommend alternative finance to your clients?’ the survey showed why it is now widely thought to be an accepted and highly-versatile source of funding.

Some 89% of respondents said they would recommend alternative finance for funding growth, while 86% said they saw it as an ideal option for refinancing and restructuring. Just behind these top two came mergers and acquisitions (84%), management buy-outs and buy-ins (81) and the provision of working capital (68%).

Damon Walford, Chief Development Officer at ThinCats, said: “It is interesting to note that advisers consider all of the above challenges as being of greater significance than that of ‘Late Payment’ (19%), a key factor that has been viewed historically as a fundamental and pressing concern

“For years now, SME owners have complained that they can’t access their bank manager – and this naturally puts a block on access to finance. It’s now alternative finance providers are heralding the return of a genuine, personal relationship with local business experts, who invest their knowledge and time in their clients’ business growth (a role that the banks have long since eschewed) to put their considerable expertise to good use – supporting SMEs.”

ThinCats surveyed 300 professionals during Spring 2018.