New research from Shawbrook has shed light on the financial strategies employed by key decision-makers at small and medium-sized enterprises (SMEs) in the UK, revealing that a huge 83% have resorted to a form of personal finance to fund their businesses.

Among the respondents, 48% admitted to using personal credit cards, 36% have taken out personal loans, and 46% dip into their personal savings to finance their businesses.

Company credit cards emerged as the most popular form of credit for SMEs, with 67% of respondents currently using them. An additional 13% expressed intentions to acquire a company credit card in the future. Bank loans were used by 47% of SMEs with over 100 employees, but only 36% of smaller SMEs.

There is also appetite for more specialist funding options amongst SMEs. Invoice finance is the most popular form of alternative finance, with just under half (48%) of SMEs using some form of invoice finance, followed by commercial loans (44%), asset finance (43%) and asset-based loans (38%).

Neil Rudge (pictured), head of enterprise at Shawbrook, said: "It’s concerning if some of the more established SME owners are relying on their own money simply because they’ve found limited access to funding from traditional providers.

“There’s a lack of awareness regarding the plethora of options available to SMEs via specialist lenders and while credit cards, borrowing from family and personal loans can be the right option for some smaller businesses, it will rarely be a sensible or productive long-term solution.

“It’s encouraging that a good number of business owners we spoke to have cottoned on to the fact SME finance is sophisticated, flexible and agile these days and have found their solutions from specialist providers, meaning they don’t have to dip into their own pockets.”