One in four funding applications submitted to banks by SME tech companies in the past year was rejected, according to figures release by online bookkeeping service Crunch.
The poll of 500 small IT companies also reveals that one-third still plan to apply for funding in the next financial year, suggesting optimism that belies any rejection experienced in the past 12 months.
Financial institutions turned away the highest proportion of funding applications (34%), followed by private equity firms (26%). Even family and friends rejected 10% of the requests. Government grants and support schemes were the most receptive formal investors – only turning down 11% of applications.
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Despite this, government funding was still the least popular route for tech companies seeking investment. Only 9% chose this option, putting it below crowdfunding (16%) and private investment (26%). Banks (41%) and finance institutions (42%) remain by far the most popular funding routes.
Crunch Accounting MD Darren Fell interpreted the results as showing that “the business climate is changing and the tech industry in particular is looking to grow”.
“However without the proper lending, support from banks and financial institutions, it’s almost impossible for small companies to meet their true potential,” he explained.
“The success and extension of the Startup Loans scheme shows that many entrepreneurs out there are looking for funding.”