1 in 8 SMEs has used credit cards and personal loans to fund their businesses over the last 12 months, according to new research by Santander Corporate & Commercial.

The survey of 638 senior decision makers also shows that 25% had taken out overdrafts to fund their businesses over the past year.

43% of SMEs said they were concerned about their cash flow income with delayed payments from customers being experienced by a quarter of SMEs in the UK.

Cash flow problems were most prevalent in London, where 38% of businesses raised concerns for the coming year.

Mike Reeves, Joint Managing Director of SME Banking at Santander, said:

“It’s worrying to see that many of Britain’s small firms are relying on personal credit facilities to finance their businesses, and are concerned over effectively managing cash flow.

“If businesses are experiencing problems with late or failed payments, then the simple answer is invoice finance. It’s a tried-and-tested method of unlocking the value of unpaid invoices, providing companies with immediate access to their money.”