MORE than a quarter of technology businesses rely on a bank loan or overdraft to fund development, according to a study by Grant Thornton.

Only 12% depend on cash from the venture capital market, suggesting that some could be missing out finance from this source.

Pat McLay, business advisory partner in Glasgow, warned: “There has been strong evidence of the debt market hardening over recent months and banks are taking a much more risk averse view.

“This is bound to cause problems for debt-financed businesses of the size and type surveyed.”

McLay said that mid-market technology companies should re-visit the VC market if they had a long-term development capital need and the track record to attract investment.

He added: “Many technology businesses had such a hard time raising finance two to three years ago that they have formed the view that VC finance is not for them.

“However, an established trading business with further significant growth potential is a very different proposition to a start-up.”