Member Article

Know your CAPEX from your elbow? Befuddling jargon putting SMEs off applying for finance

Decision makers at London SMEs are increasingly being turned off applying for finance as they struggle with the bewildering array of exotic financial lingo utilised by providers.

According to research by LDF, over half (52.1%) of SMEs they surveyed claimed that business terminology had put them off applying for financing and loans, something which the small business finance provider claims could be hampering the growth of the capital’s small firms.

In particular, decision makers identified CAPEX (26%), COGS (24%) and ROCE (20%) as the three terms which befuddled them the most and proved the biggest turn off when looking into financing options for their business.

Peter Alderson, Managing Director of LDF, has branded the figures ‘disappointing’ and believes that opaque business terminology is just another needless obstacle that small businesses have to tackle.

He said: “For many, running a small business is a challenging, all consuming activity, so complicated financial jargon and acronyms are just extra barriers in the way of their success.”

Elsewhere, LDF’s research also found that nearly three in five (57.6%) London SMEs had recently been turned down for finance, giving the city the lowest rate of loan acceptance out of all the UK’s regions.

The rise of alternative forms of financing, such as peer-to-peer lending, has plugged the gap somewhat in recent years as the bigger lenders of have retrenched their small business borrowing, but it is clear that there is still more to be done to get finance to businesses who need it.

Alderson added: “It’s disturbing that almost three in five (57.6%) SME decision makers in London have been turned down for finance. At LDF, we are committed to making access to finance, as easy, quick and trouble-free as possible.”

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