For the small business landscape in the UK, the criticality of securing finance has been spotlighted by a recent research study.
A staggering 53% of small enterprises admit their growth strategies would be on hiatus if they fail to secure needed finance, underlining the crucial role business funding plays in the currently volatile economy.
The Consequences of Diminishing Lending and Regulatory Shifts
As the UK’s economy attempts to recover from the pandemic’s blows, exacerbated by escalating inflation and price rises, lending to small and medium-sized enterprises (SMEs) by the main High Street banks has seen a concerning 18% decrease year-on-year in 2022.
Concurrently, proposed regulatory changes by the Prudential Regulation Authority (PRA) plan to remove preferential treatment for SMEs, further pressurising the sector.
Business Survival and Seasonal Peaks: Dependence on Funding
The requirement for finance is acutely pronounced among enterprises expecting contraction (56%) or grappling to survive (85%).
The research further indicates that businesses experiencing summer seasonal peaks (65%) are particularly dependent on securing finance, reflecting a financial lifeline’s importance during fluctuating income periods.
Sector-wise Dependency on Financing
When examining specific sectors, small businesses within manufacturing (60%) and construction (58%) emerged as the most likely to lean on funding in the next 12 months.
A clear indication of how integral financial backing is across these industries’ diverse needs and growth strategies.
Risk to Growth: Plans Affected by Lack of Funding
In drilling down to the specific areas that are most dependent on funding, increasing workforce emerged as the most common. About 26% of businesses disclosed their need for funding to facilitate headcount expansion.
Similarly, 25% of firms acknowledged their need for funds to back new product or service development, peaking in the hospitality (35%) and real estate (33%) sectors.
The necessity for finance extended to acquiring new vehicles (22%), mostly in transport and distribution (52%) and agriculture (42%) sectors, and launching into new markets within the UK (18%) and overseas (17%).
Additionally, around half of agricultural businesses (47%) and a third of manufacturers (37%) revealed their dependence on financing for new machinery or production lines.
Small businesses access unsecured, fast funding from Got Capital. As an alternative lender, Got Capital offers financing solutions specifically designed for and catered to the needs of SMEs.
