North East firms ability to access finance is not holding back growth despite the continued uncertain economic outlook, according to a survey by lawyers Watson Burton.
The Newcastle-based firm said that three-quarters of the businesses it spoke to were “hopeful” about their growth prospects in the next 12 months.
More than half – 56pc – of the 90 firms that took part in the poll said that lack of finance was not an issue for their expansion plans, and 27pc aimed to raise more than £1m in the coming year to fund their growth.
Paul Wigham, associate in corporate finance in Watson Burton, said: “Despite the doom and gloom constantly streaming from the UK business press, respondents within the North East seem optimistic about business growth over the next 12 months and positive about their ability to access finance.”
More than six out of 10 turned to their bank first when seeking finance and half said they enjoyed a good relationship with the bank. Loans and mortgage lending were the main sources of funding for around a third of those surveyed.
However, angel investments and asset-based lending are growing in popularity as methods to finance regional business growth.
“One of the most interesting aspects of the survey relates to the region’s use of angel investment and loans as a source of funding with over 45pc of businesses accessing finance from business angels, friends and family in the last 12 months,” said Mr Wigham.
“This could be because there is a smaller pool of business angels operating within the North East in comparison to other regions, which means that businesses are more aware of the angels who are actively backing the growth ambitions of businesses.
“Also, the links between the Finance for Business North East funds and the angel networks may be more mature in the North East, meaning companies are matched with the most appropriate angel investors more often.
“Whatever the reason, it is positive that North East businesses have demonstrated their willingness to engage with business angels, who can offer much more than just funds to an investee business.”
Those firms which faced problems accessing funds said that availability of finance was the main issue (36pc), and 34pc blamed this on the uncertain economic outlook. However, the overall picture was more positive.
“Overall, there appear to be reasons to be cautiously optimistic about the North East firms ability to adapt to the new funding landscape that has developed during difficult economic times,” said Mr Wigham.