SME owners are feeling more optimistic and are keen to invest in growth, but are being frustrated by the mix of financial options open to them, according to a survey from ACCA UK (the Association of Chartered Certified Accountants) and The Corporate Finance Network (CFN).

A total of 89% of owners are reporting that they are trading at or above the expected level in July, which is a big increase from last month’s figure of just 60%.

They have also shown a surge in confidence over the last few weeks, with almost 90% expecting to return to pre-Covid levels of turnover and productivity within two years. Last month, just 50% thought this was possible. More than 28% had brought forward plans to obtain additional finance to invest in their business.

However, this positive energy and ambition is being held back by struggles to find the right mix of financing for success. Two-thirds of business leaders (67%) have found it more difficult to obtain even an overdraft from their bank in recent weeks. One-third have also struggled to finance their growth for the next year with other traditional options, including mortgages or finance leases.

This has led to a spike in mental health problems, as owners are frustrated in their efforts to take advantage of reopening.

A worrying 57% report that they are feeling more stressed and anxious, which is a jump of 20% from last month’s figure. And almost 6% are feeling unable to cope, with 12% saying they are not sleeping.

The difficulties SMEs are facing come at a time when they are desperate to re-establish their businesses and put themselves on a solid financial footing for growth.

Around one-third have forecast their financial requirements for the next 12 months, but they are having problems accessing commercial finance facilities, following the closure of many of the government-backed support schemes and the slow rollout of the Recovery Loan Scheme, which launched in early April 2021.

The SME Tracker, which reports what small businesses tell their accountants, reported data from accountants representing 8,863 SME clients.

Claire Bennison, Head of ACCA UK, said “Economic indicators are reporting a strong rebound in the UK economy and our members are keen to get back to full throttle business as trade recovers. However, they are struggling to find the right mix of financial support to guide them through the next stage of the pandemic. This is frustrating for business owners and is clearly taking a toll on their mental health.”

“We would appeal to the financial services sector to support small businesses at this crucial time, to provide them with the right financial backing for them to get back to growth.”

Kirsty McGregor, Founder of The Corporate Finance Network, said “It’s encouraging that businesses are getting back to good levels of trading and want to invest to grow. But it’s important to get the right mix of finance to do this in a sustainable way for the long term. We can see that increasing anxiety is leading businesses to take a short-term approach and traditional sources of funding are drying up, particularly for SMEs who have already taken government-backed loans.”

“We continue to hear that the uptake of recovery loans is very slow and few of the accredited lenders are making them available. The communications around this scheme has been poor and they seem to have made very little impact since they launched in April.”