UK smaller companies sought out extra debt final 12 months, with many utilizing it to fund investments that that they had beforehand delayed.
The British Enterprise Financial institution’s fourth Nations and Areas Tracker reported that 46 per cent of smaller companies accessed exterior finance final 12 months, a ten per cent enhance from 2022.
The state improvement financial institution’s analysis advised that this rebound adopted subdued circumstances in earlier years.
Learn extra: British Enterprise Financial institution experiences £122m loss as valuations fall
Between 2021 and 2023, fewer than half (44 per cent) of smaller companies surveyed had recognized and made any investments of their enterprise, the report mentioned.
The analysis additionally discovered that small companies are more and more counting on bank cards. Throughout all the varied finance varieties accessible, almost one in 5 (17 per cent) companies made use of bank cards adopted by financial institution overdrafts (13 per cent) and leasing and automobile finance (12 per cent), which the British Enterprise Financial institution mentioned highlights the challenges for smaller companies searching for exterior finance.
Learn extra: SME Finance Taskforce publishes motion plan to spice up lending
Moreover, the report revealed a cautious outlook amongst smaller companies. 61 per cent of respondents mentioned they felt present buying and selling circumstances current extra threats than alternatives, whereas 76 per cent mentioned they have been nonetheless feeling the influence of inflationary value pressures.
Nonetheless, the British Enterprise Financial institution mentioned that early indicators from 2024 counsel a extra promising outlook.
It reported a 21 per cent enhance within the quantity of authorized loans and overdrafts within the first half of 2024 in comparison with the primary half of 2023, with the South East experiencing the biggest uptick.
Learn extra: British Enterprise Investments: Addressing the SME funding hole
“Whereas we proceed to face a difficult financial atmosphere, it’s encouraging to see a renewed urge for food for exterior finance among the many enterprise group,” mentioned Louis Taylor (pictured), chief govt of the British Enterprise Financial institution.
“This 12 months’s Nations and Areas Tracker captures a temper of cautious optimism all through the UK, and one which is able to hopefully see an uplift this 12 months and past.”
