Nearly half of UK adults (47%) considered starting their own business, but fear of funding rejection stopped two-thirds from making the move, research from money.co.uk business loans revealed.
The survey found that two-thirds (69%) of those surveyed said they had never applied for financial support such as a business loan or grant.
Only 16% said they had been accepted for support once, while 9% said they had been rejected once.
Just 4% had been accepted multiple times and 2% rejected more than once.
The survey also found that a third (31%) of respondents reported ‘fear of failure or financial risk’ as a top barrier.
Only 13% felt very confident about securing financial support from a bank or other provider.
Despite concerns, only 11% of applicants had been rejected for business funding, and one in five (20%) were accepted at least once.
The data also showed that the 25 to 34 age group made more funding applications than any other, at 56%.
Among 18 to 24-year-olds, a quarter (24%) said they were very confident about getting help from financial institutions.
For this group, 49% said access to funds was the main barrier to starting a side hustle.
Joe Phelan, money.co.uk business loans expert, said: “From the survey insights, it’s clear that funding is a key challenge and concern for many aspiring entrepreneurs.
“Grants, personal savings and other debt-free forms of funding won’t always be possible but there are ways you can lend responsibly to achieve your entrepreneurial goals.”
Phelan advised that it is important for applicants to improve their credit score, as lenders are more likely to offer funding to those with a good credit history.
He explained that using a business credit card for manageable purchases and making repayments on time can help build credibility with lenders.
He also advised developing a detailed business plan that sets out projected revenue and includes market analysis, cash flow forecasts and evidence of demand, such as sales or social media following.
This helps show lenders that the business is viable and that repayments are affordable, according to Phelan.
He added: “Like a business plan, a repayment plan should outline cash flow and time-stamped revenue projections.
“Lenders appreciate financial transparency, so outlining when they can expect to receive their return on investment is key.”
