Results of a survey undertaken by ACCA UK and The Corporate Finance Network suggest that SME owners are feeling more optimistic and are keen to invest in growth, but are frustrated with the mix of financial options open to them.
89% of owners reported trading "at or above" the level expected in July, a big increase from last month's figure of 60%. Confidence is returning with nearly 90% of respondents expecting to return to pre-Covid levels of turnover and productivity within two years, compared to only 50% in the previous survey.
However, finding the right mix of financing remains a significant hurdle. Two thirds of business leaders have found it hard to obtain even an overdraft from their bank in recent weeks. One third have also struggled to finance growth for the next year with other traditional options such as mortgages or finance leases.
The situation is not helping business owners' state of mind, with 57% reporting feeling more stressed and anxious, 6% feeling unable to cope and 12% not sleeping.
The financing challenges come at a time when many small businesses are trying to move forward from the impacts of lockdown.
Around a third of SMEs reported having forecast their financial requirements for the next 12 months, but the closure of some government-backed support schemes and the slow rollout of the Recovery Loan Scheme has been unhelpful.
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 communication around this scheme has been poor and they seem to have made very little impact since they launched in April."