Its SME Access to Finance study of 683 decision makers in UK businesses also found that one in four (25%) had relied on overdraft facilities over the past year.
This is especially common in the North East where 26% of SMEs said they had used personal credit facilities as financing for their businesses – more than double the national average.
Santander Corporate & Commercial’s study also found a number of firms – some 8% –admitted they had never reviewed their finance requirements with a view to financial stability or to assess how much money is required to execute new projects.
More than two-fifths (43%) of businesses said they were concerned or very concerned about cash flow over the next 12 months.
The biggest problem, experienced by a quarter (25%) of SMEs, was late and failed payments from customers but, despite this, just 5% said they had used invoice financing in the past 12 months.
Cash flow worries are most prevalent in London, where nearly two fifths (38%) of business managers were either concerned or very concerned about their cash flow in the next 12 months.
Mike Reeves, joint managing director of SME banking at Santander, said: “It’s worrying to see that many of Britain’s small firms are relying on personal credit facilities to finance their businesses, and are concerned over effectively managing cash flow.
“If businesses are experiencing problems with late or failed payments, then the simple answer is invoice finance. It’s a tried-and-tested method of unlocking the value of unpaid invoices, providing companies with immediate access to their money.”
He added: “SMEs are the lifeblood of the UK economy, helping to create jobs and drive local economic growth. Santander Corporate & Commercial knows that and, as a scale challenger, we bring a unique approach to help all UK businesses achieve their growth ambitions.”
