UK SMEs’ use of external finance remains stable despite macro uncertainty
UK businesses’ use of external finance remained stable last year after a sharp uptick in 2023, analysis by the British Business Bank has found.
The UK development bank’s fifth nations and regions tracker showed that in 2024, external finance use among smaller UK companies declined marginally, remaining stable at 45 per cent. In 2023, external finance usage increased by 10 percentage points, compared to the year before.
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“In the face of a challenging economic environment, it is encouraging that use of external finance has remained stable,” said Richard Bearman, British Business Bank’s chief development officer.
Last financial year, the bank provided £6.8bn of finance for smaller businesses, supporting 24,000 businesses for the first time, with 84 per cent of total business support provided outside of London.
The report also found that 38 per cent of smaller UK business are open to seeking external finance to grow, which is a five-percentage point increase from 2023 data. The West Midlands recorded the highest rise in 2024, with an uptick of 20 percentage points.
Northern Ireland is the UK region with the largest share of smaller businesses using external finance, at a level of 52 per cent.
Meanwhile, credit cards remain the leading external finance type at 15 per cent, followed by overdrafts at 11 per cent, and leasing finance at 10 per cent.
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However, the report also revealed that 19 per cent of businesses that were open to considering external finance thought it would be difficult to secure.
Bearman remains, however, optimistic about the bank’s future endeavours. “With the expanded capacity of the bank under the modern industrial strategy, we are poised to build on our existing work across the nations and regions, including the new investment funds for the Southeast and East of England,” he said.
