Nearly 250,000 SMEs in the UK are suffering ‘significant financial distress’ according to the latest Begbies Traynor Red Flag Alert survey.

The insolvency experts surveyed thousands of UK businesses and found that there is a rise in the number that have experienced one or more of the ‘significant distress’ indicators.

These indicators include things such as having to make redundancies, the need to seek finance or being unable to pay staff on time.

Q2 of 2014 saw 237,361 businesses show signs of significant distress, of which 90% are classed as SMEs. The figure was a 34% rise on the 176,766 from Q2 of 2013.

Julie Palmer, partner at Begbies Traynor, said: “Access to funding is still a major issue for a huge number of UK SMEs. Although traditional bank finance is now widely available for those firms fortunate enough to comply with mainstream lending criteria, it remains a different story for businesses in complex or challenged circumstances.

“Our latest Red Flag findings once again underline the critical importance for current government initiatives to increase the diversity of funding providers and to better signpost alternative business finance.”

Begbies Traynor chairman Ric Traynor also warned that many SMEs have been left in a vulnerable position following the recession: “The UK needs SMEs to be able to take on new orders, recruit staff and invest in growth. But without adequate funding in place, this kind of investment can only be achieved by overstretching their finances, leaving them little leeway should things take a turn for the worse – a risky strategy at a time of growing political and monetary policy uncertainty.”