ONLY 19 per cent of small and medium-sized enterprises (SMEs) in the South East say banks’ advice always meets their needs, highlighting a failure of many lenders to cater for SMEs’ individual circumstances, according to a new report published by Close Brothers Group.

Close Brothers surveyed owners of more than 1,000 small and medium-sized businesses about the changing needs throughout their growth stages, showing that the individual requirements of SMEs are not being met effectively.

SMEs, who account for 99.9 per cent of all private sector businesses, play a vital role in the UK’s economy, and many feel they do not receive a tailored service from their lender when it comes to their stage of development and their sector.

More than a third (37 per cent) of South East SMEs have experienced barriers in accessing finance, with a nearly a fifth (17 per cent) being turned down completely when they are looking to grow.

Of the South East’s small and medium-sized businesses who experienced barriers in accessing finance, six per cent stated that lenders didn’t understand their specific needs, with a further 11 per cent saying that their lender did not understand their sector at all.

The report additionally found that generalist lenders, who account for 90 per cent of lending to SMEs, often cannot meet these varied requirements of SMEs for funding at differing stages of their growth.

This poses a significant challenge for the SME sector, especially as a large number of SMEs (38 per cent) only turn to high street banks for information and advice about the most suitable types of finance for their business.

In addition to the lack of guidance received by SMEs as they grow, there is a clear issue with long-term business planning, with only 32 per cent of the businesses in the South East planning their needs for finance more than a year in advance, while 64 per cent only plan up to a year in advance.

Adrian Sainsbury, chief executive officer at Close Brothers’s commercial division, said: “Smaller businesses do not have the same access to and experience of the myriad of options that are available to them as larger companies.

“It’s clear that the traditional sources of advice for many are no longer sufficient. Many do not feel their banks are taking into account their sector and specific circumstances, meaning they are not receiving the level of support they need to secure the right products and funding for the future.

“Given the importance of SMEs to the economy, it is vital that these companies are properly understood by the mainstream funders they turn to for guidance, whether knowing the specific financial needs of that business in a particular sectors.

“Or identifying the type of lending that will best suit their business at any given time. A specialist, rather than a generalist, approach is clearly beneficial.”