With inflation finally easing, the UK could be on the brink of a potential small and medium enterprise (SME) boom with business owners ready to invest an estimated total of £2.4tn over the next two years, new research from Together has revealed.
Together’s research found that 65% of SMEs were eager to put at least £100,000 into their individual businesses yet a lack of credit availability is dampening ambitions – with huge implications for future growth in the economy.
27% of SME owners and leaders stated that a lack of investment breaks and benefits from local and national government was also restricting business growth potential.
Indeed, 17% of SMEs were not confident in being able to pursue investment goals over the next two years due to the toughening of lending criteria and heightened cautiousness from mainstream banks (23%), and a lack of understanding of their funding needs (21%).
According to the latest Gov business population data, there were an estimated 5.5 million SME businesses in 2023, contributing a significant 53% of private sector turn-over.
In addition, inflation and borrowing costs were still of critical concern to SME voters in the lead up to the upcoming election day, having a direct impact on the state of the economy and general financial and business confidence.
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.
“This July 4th, the party who can communicate the most appealing pro-growth policies to liberate and support independent SMEs and UK entrepreneurship will win the minds of voters.
“Further stabilising the dire impact of energy, labour and running costs is a must, as well as ensuring that a new Government understands the specific financial and business needs of the sector.”
He added: “While there are early signs that inflation is finally returning closer to the Bank of England’s 2% target, bridging loans will continue to be crucial to maintaining investment activity for SMEs.
“These short-term, flexible loans are proving a more palatable option to businesses as a means of boosting funds for a variety of reasons from paying off an unexpected tax bill, buying raw materials to fulfil a large order or taking advantage of a business growth and expansion opportunity.
“Together expects the bridging finance market to grow by 19% over the next five years as businesses look further afield for agile finance solutions outside of the mainstream lending pool.”
