Peter Cooper, head of restructuring at Baker Tilly, commented: “Bank borrowing remains available, but in most instances is becoming more expensive. From what we are seeing, all the major banks have money to lend but are more than ever looking for applications supported by sound business plans. Accordingly businesses will be reluctant to add to their current debt levels with increased borrowing and the focus for them will be on managing their current cashflow more smartly. My worry is for businesses that do not have strong cashflow management skills within the business.”

Of those planning to raise finance in 2011, 27% are opting for private equity funding. Robert Donaldson, head of M&A and private equity, explained that this is much higher than in previous years and demonstrates that private equity is now firmly on the funding agenda: “There is a growing appreciation of the merits of longer-term equity funding versus bank debt. Having equity investors on board when markets turn and as banks tighten their credit criteria and pricing can be a definite advantage.”

Steve Merchant, head of asset-based lending, said: “Against a backdrop of a general reduction in lending – be it owing to the caution of banks or the desire amongst many businesses to de-leverage – the invoice finance/asset-based lending market is growing once again.

“In the 10 years before the credit crunch, total lending in this sector had increased four-fold. As might be expected, the recession was a set-back but total lending to businesses is now increasing and expected to accelerate. This form of finance is highly efficient to banks in terms of their use of capital. With a more secure position, lenders are able look more enthusiastically at all types of proposals – including those for businesses that have significant challenges. In short, businesses looking to raise new finance should explore all their options.”

• 55% of respondents said that their banks had met all or most of their banking needs over the previous 12 months. 17% said their banks had met some of the banking needs while 15% said that the banks had met none of their needs.
• 38% of those polled said that they would like their banks to provide better lending terms. 19% said that they would like personalised advice and service.
• 74% of owner/directors said that they were not planning to raise finance in the next 12 months.
• Of the 26% who said that they were planning to raise finance, 62% expected to do so by traditional bank borrowing and 27% by means of private equity or venture capital investment.