Urgent call for more accessible finance options with 34% of SMEs at risk of closure

More flexible finance options needed in the UK as 28% of SMEs are being turned down for funding

A survey of 500 SMEs by invoice finance company Novuna Business Cash Flow, highlights the critical need for more accessible and flexible financing options for small and medium-sized enterprises if they are to survive.

34% of SMEs could cease trading if unable to secure funding

The survey revealed a concerning statistic: 34% of SMEs are at risk of closing their doors permanently if they are unable to secure necessary funding. This alarming figure contrasts sharply with the surprising revelation that 50% of SMEs have not sought any form of financial assistance since November 2023, despite the precarious position many find themselves in.

28% of SMEs have been rejected for essential funding

The reluctance to seek financing during these difficult times can be attributed to a variety of factors. A significant portion of respondents (43%) believe that the current economic conditions have exacerbated the difficulty of accessing funding. Additionally, a concerning 28% of the businesses surveyed reported being turned down for funding since November 2023, further discouraging attempts to secure much needed financial support.

29% have had to apply for funding for the first time ever

Highlighting the urgency of the situation, nearly a third (29%) of SMEs surveyed have found themselves applying for business funding for the first time ever since November 2023. This statistic not only reflects the growing financial strain on businesses but also the changing landscape of SME financing.

These findings highlight the urgent necessity for enhanced and adaptable financing solutions for SMEs to ensure their survival. By providing a broader range of financial assistance and support, we can safeguard the future of these essential pillars of our economy.

John Atkinson, Head of Commercial and Strategy at Novuna Business Cash Flow commented:

"In light of our recent survey findings, it's clear that SMEs are facing unprecedented financial challenges, with 34% on the brink of closure due to funding shortages.

Surprisingly, half of these businesses haven't even applied for financial help since November 2023, a decision influenced by tougher access to funds and previous rejections.

As we navigate these turbulent times, our focus must be on creating a more supportive financial environment that acknowledges the evolving needs of small and medium-sized enterprises."

About the research

• Field Dates: 9th - 15th February 2024.
• Sample: 500 UK SME decision makers - even split between sole traders, micro (1-9 employees), small (10-49 employees) and medium (50-249 employees) businesses.
• Weighting: Weighted to be nationally representative.
• Results based on the following survey questions:

Thinking about the cash flow of your business, which of the following forms of funding, if any, has your business accessed or applied for since November 2023? Select all that apply:

• N/A - we have not accessed or applied for funding since November 2023.

Are the below statements about funding true or false to your business:

• • I have been turned down for business funding since November 2023.
  • The unfavourable economic conditions made it harder to access funding for my business.
  • I would have to close my business if I couldn’t access the funding I need.
  • I have applied for business funding for the first time ever since November 2023.

More details of this survey can be provided upon request.