Almost three quarters of business owners pumping personal savings into SMEs

New research suggests that the majority of British business owners regularly pump personal savings into their small and medium-sized enterprises (SMEs) in a bid to avoid taking out loans or borrowing additional funds from banks and alternative lenders.

According to a study commissioned by Hitachi Capital, almost three quarters (72 per cent) of SME owners have pumped personal cash into their business in the past year.

More than half (54 per cent) of business owners said that their main reason for doing so was that they wanted to ‘owe out’ as little money as possible.

In fact, the research revealed that most businesses generally saw borrowing as a last resort, with only 17 per cent of SME decision makers claiming to feel comfortable borrowing money to invest in their business.

The self-financing trend was found to be most popular amongst budding entrepreneurs and start-up businesses.

As many as 91 per cent of start-up and microbusiness owners said that they had used personal savings and money to get their business or business idea off the ground.

When it came to more established SMEs, however, only 69 per cent said that they had invested personal funds into their business.