Entrepreneurs expect funding conditions to ease

Entrepreneurs are still envisaging a tough time in securing finance over the coming months but think that money should be easier to obtain.

Research from Investec, the private investment bank, has suggested that three out of five entrepreneurs (60 per cent) in May were anticipating that access to capital will be a challenge in the next year.

The figure, however, is down from the 75 per cent recorded last November.

Some 39 per cent thought that conditions for accessing external sources of capital would be 'normal' or 'easy'. This compared with 25 per cent who said the same six months ago.

The survey revealed that entrepreneurs are planning to use a variety of sources to secure capital over the next 12 months.

Some 59 per cent expect to use a bank loan or overdraft, compared with 61 per cent in November 2010.

Just over one in three (35 per cent) intend to raise equity through venture capital and/or private equity (compared with 25 per cent last November), and one in four (24 per cent) are eyeing invoice discounting or asset based lending.

The poll identified a strong increase in demand for capital. Of the entrepreneurs interviewed, 72 per cent said it is either 'very likely' or 'quite likely' that they will look for capital this over the next 12 months.

Only 22 per cent of those interviewed said that they had no plans to raise capital from external sources over the next 12 months.

Ed Cottrell of Investec said: "Our findings suggest that many of the country's leading entrepreneurs are feeling optimistic about their future prospects, but these could be put in jeopardy if they cannot obtain access to capital."