NEARLY half the owners of small and medium sized enterprises in Glasgow have had to raid their savings to develop their businesses amid widespread dissatisfaction with banks, research has found.

In a survey of owners of small and medium sized enterprises for the LDF unsecured lending business, 47 per cent of respondents in Glasgow said they had been forced to use their savings to start or grow their businesses.

Some 37 per cent of respondents in Edinburgh had drawn on their savings to start firms.

One in five respondents in both cities had borrowed money from family and friends to invest in their businesses.

Around a third of people running SMEs in Edinburgh said they had gone without a regular monthly salary due to cash flow issues, compared with 16 per cent in Glasgow.

Some 56 per cent of respondents in Glasgow and 66 per cent in Edinburgh criticised the UK’s banking system for not being “business friendly”, against 52 per cent across the UK.

The survey found funding issues were seen as the biggest challenge for people starting businesses in Glasgow and Edinburgh.

Businesses in Glasgow required around £40,000 start up funding on average, compared with £23,000 in Edinburgh and £27,000 across the UK.

Respondents in Glasgow and Edinburgh were most likely to be active in the professional services and finance sectors respectively.

Excessive red tape was seen as a big obstacle by firms in both cities.