Nearly 6 in 10 SMEs use personal money to help run their business


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Nearly 6 in 10 SMEs use personal money to help run their business

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  • 59% of small business owners report using their personal money to finance their businesses
  • Two- fifths of business owners are concerned about closing in 2021
  • Advice from accountants is to ensure businesses are well funded as a priority in 2021

Nearly 3 out of 5 business owners (59%) felt the need to fund their businesses with personal money last year as they grappled with the impact of the pandemic. Our new research also suggests that small business owners are becoming increasingly worried about the viability of their business with almost 4 in 10 (38%) concerned they’ll have to close this year.

Accountants’ top 5 tips for small business owners this year

In a separate survey conducted during the same period, we surveyed accountants – representing over 23,000 small businesses across the UK, – to find out the most important things their clients should focus on in 2021.

The top 5 things accountants want their clients to focus on this year are:

  • Ensuring they are well funded (49%)
  • Getting invoices paid (48%)
  • Diversifying their product offering (31%)
  • Using government schemes (28%)
  • Transitioning what they can of their business online (26%)

When SME owners were asked the same question, the majority (60%) said they will focus on ensuring they’re well funded in 2021. Yet 4 in 10 (43%) still expect to need to use their own money to finance their businesses this year.


Alastair Barlow, Founder of flinder – an accounting, consulting and data analytics business based in London: “It’s quite typical small business owners launch their business with their own money but to continue to inject personal funds to keep the business afloat becomes stressful. While it may seem like a simpler route, it’s unlikely to be the most relevant to fund the business. Cash flow for small businesses has always been a challenge and 2020 has both highlighted and exacerbated the short cash reserves that most small businesses operate under. With limited cash, understanding and optimising working capital is an important business skill – knowing where cash is tied up and how it can be converted to actual funds in the bank. Whether that’s getting paid faster by speaking to customers more regularly or understanding what stock is slow moving and carrying less of it, managing working capital can really help a business through an unprofitable (or pandemic) period.

“All businesses, large and small need to have clear visibility of cash flow to make well informed decisions today in order to help themselves tomorrow. Cash flow forecasting is fundamental to understand future cash requirements and any gaps in order to plan early and speak to the right people to support.”

Blog Image | Alastair Barlow, Founder of flinder

Alastair Barlow, Founder of flinder

Colin Goldstein, Commercial Growth Director, iwoca said: “Using your own cash to fund your business clearly isn’t sustainable for most people. The overriding message from both accountants and our survey results is that business owners need to ensure they are well prepared financially for what will be a difficult year ahead. As we continue to endure national restrictions, it’s essential that SMEs have access to business loans where dipping into their own pockets is simply not an option.”

iwoca has now distributed over £300 million through the Government's Coronavirus Business Interruption Loan Scheme (CBILS) and in June 2020 launched iwocaPay – an online buy now pay later invoice checkout to help small businesses get paid. The lender has recently partnered with Mental Health UK to develop a tailored mental health support product for small business owners.


Charlotte was a UK PR Manager at iwoca. She's been sharing news and insights about the finance industry for over four years.

Article updated on:
April 16, 2021

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