Dutch SMEs have difficulty attracting funding

A staggering 28% of Dutch SME entrepreneurs have trouble raising capital for their company. This is the conclusion of a study on behalf of October among 1,059 Dutch entrepreneurs. Moreover, about half of the respondents state that financing problems have a negative influence on being a successful entrepreneur.

Financing problems on entrepreneurship

Imagine you want to grow as an SME, but you can’t get the necessary financing. What do you do? No less than 48% of the SMEs asked, indicate that financing problems have a negative influence on their entrepreneurship. Entrepreneurs in the construction and retail sectors in particular experience a lot of problems with this. In the construction sector 60% indicated that financing problems have a negative impact. In retail this was 54%.

Difficulty attracting (sufficient) funding

More than a quarter of Dutch SMEs find it (too) difficult to attract sufficient funding for their business. According to the study, it is the most difficult for companies from the south of the Netherlands. 33% of the entrepreneurs in the south of the Netherlands have indicated this. Entrepreneurs in the North have less difficulties. 22% of the northern entrepreneurs have difficulties attracting sufficient funding.

Lack of trust in Alternative Financing

In 2018, funding through crowdfunding in the Netherlands grew to €329 million. This is a growth of 50% compared to the year before. Despite this substantial growth, 54% of SMEs say they still find alternative forms of financing (too) unreliable. These doubts are most common among companies in traditional sectors such as construction, transport & logistics and retail.

Preferably not exclusively online

About half of the SMEs asked said they would rather not take out a loan from a credit provider without physical offices. With 57 percent, entrepreneurs from the south of the Netherlands are the biggest opponents of credit providers that exist exclusively online. Which is funny, because it appeared that they have the greatest difficulty in attracting sufficient capital for their organisation.

October as a solution

What can be concluded from the study is that October and other forms of alternative financing, such as factoring, leasing, micro credits, etc.  can be an outcome for companies that are experiencing difficulties attracting funding. After all, alternative forms of financing take a different approach at funding than the banks. For example, at October we look at the ability of a company to repay their loan, rather than the securities that a company can pledge.

Nonetheless, not every company finds their way towards alternative financing. From the study it seems like more than half of the Dutch SMEs think alternative forms of financing still are unreliable. This has to do with the lack of personal touch and too many different offerings. Although we are not planning to open physical offices, we are working on other initiatives to increase awareness and gain trust. Among which, for example, this study.