As inflation eases, the UK could be on the brink of a potential SME boom, with business owners ready to invest an estimated £2.4 trillion over the next two years. However, funding challenges are holding them back.
Research from specialist lender Together finds that 12% of SMEs were denied or rejected for loans from mainstream lenders in the past 12 months, dampening investment ambitions.
This has led to 21% of business leaders delaying innovation projects and new product launches, and 20% refraining from expanding their workforce.
Further barriers to lending were identified, with 17% of SMEs denied business or personal credit cards, 12% unable to secure loans from family and friends, and 10% unable to remortgage a business or property.
Despite the appetite for support, tougher lending criteria from mainstream banks have created a funding void for over half of SME loan applicants.
Consequently, 55% of SMEs are seeking alternative finance sources to achieve their business objectives.
Bridging finance, provided by specialist lenders, has become an increasingly popular solution. 14% of UK SMEs have used a bridging or short-term loan to support growth, with Together providing £100m of bridging finance each month to support businesses this year.
Ryan Etchells, chief commercial officer at Together, said: “The UK’s 5.5 million small and mid-sized business owners are champing at the bit to realise their investment and growth plans over the next two years.
“At Together, we will continue supporting SMEs across the UK, providing the investment they need to meet their ambitions.
“It will be interesting to see whether the government, whichever it may be, will be able to deliver on the support the sector has to have to make these ambitions a reality.
“Further stabilising the dire impact of energy, labour and running costs is a must, as well as ensuring that the new party in power understands the financial support that these businesses need.”
