Britain's fastest growing small businesses in urgent need of finance
Wednesday 18th May 2022
Seven in 10 small businesses (70%) that predict significant growth in the next three-months say they will have to put plans on hold if they were unable to secure finance. Access to finance and borrowing is also urgently needed by small businesses most affected by COVID - those that either had to close or repurpose their ventures last year.
The new research from Novuna Business Finance underlines how important access to finance is for the small business sector at a pivotal time for the economy - with many trying to rebuild after the pandemic in the face of spiralling inflation and price rises. Overall, 55% of small business leaders cited growth plans that would not be possible if they were unable to secure finance. The need for finance correlated with businesses that were more likely to be planning growth - 70% for those predicting significant expansion, compared to 61% that predicted modest growth and 47% the predicted no growth.
The need for finance was also greater for enterprises that had seasonal peaks during the summer (67%) and it was also regarded to be vital by those enterprises that had been most affected by the pandemic. Nationally, 74% of small businesses that had closed their doors during lockdown needed finance to power current growth plans. The same was true for 69% of business owners that had re-purposed their business during lockdown and 57% of those that had adapted to a remote or home-working routine.
Which specific growth plans are at risk?
- Looking at the specific challenges small business owners would face if they were unable to secure finance, the representative poll of 1,196 business owners revealled that hiring people would need to be put on hold. This has become a bigger issue in the last 12-months and compared to pre-pandemic years, rising from 21% to 32%.
- Investing in IT and modernising tech equipment would also be put on hold without first securing finance. This has almost doubled since pre-pandemic years (up from 16% in May 2018 to 30% this month). The importance placed on enterprise modernisation is perhaps a symptom of the big shift to the online world during the lockdown era - and is forcing many small businesses to invest to tech in order to keep up with the pace of market change.
- Compared to 12-months ago, more small businesses said they needed funding to support new product development (29%) and marketing campaigns (27%), whilst 21% said they needed finance to purchase new machinery.
Growth plans that would not be possible without first securing finance
2022 | 2021 | 2018 | |
Increase headcount hire new people | 32% | 21% | 22% |
Modernise IT capability / purchase new equipment | 30% | 24% | 16% |
Launch new products / survives | 29% | 31% | 18% |
Run a marketing campaign | 27% | 20% | 19% |
Move to better location / bigger space | 27% | 20% | 18% |
Invest in new vehicles | 25% | 24% | 16% |
Pitch for major accounts/ compete with larger firms | 24% | 11% | 18% |
Invest in new production lines / machinery | 21% | 17% | 15% |
Launch into new market segments within the UK | 19% | 20% | 13% |
Invest in staff training programmes | 19% | 18% | 15% |
Launch into new markets outside the UK | 17% | 19% | 12% |
Pay suppliers on time | 16% | 9% | 12% |
Fully adapt the business to new data protection laws | 9% | 11% | 8% |
Other | 8% | 7% | 7% |
Across nine UK regions, the need for finance from small businesses has increased on last year. Regionally, enterprises in the North West and Wales were most reliant on finance to secure growth (62% each), followed by small businesses in London (60%). The biggest year-on-year rise in the need for finance was among small businesses in the North East. By industry sector, there were also significant rises in the reliance on finance in manufacturing, construction, transport and media.
Percentage of small businesses that need finance to execute growth plans - by region
2021 | 2021 | |
North West | 62% | 53% |
Wales | 62% | 52% |
London | 60% | 60% |
West Midlands | 57% | 51% |
North East | 56% | 36% |
Scotland | 55% | 51% |
South West | 55% | 38% |
South East | 50% | 47% |
East | 48% | 45% |
East Midlands | 48% | 50% |
Yorkshire / Humber | 46% | 44% |
Percentage of small businesses that need finance to execute growth plans - by sector
2022 | 2021 | |
Media & Marketing | 72% | 48% |
Construction | 63% | 45% |
Manufacturing | 62% | 49% |
Transport & distribution | 62% | 58% |
Legal | 57% | 47% |
Retail | 56% | 50% |
IT & Telecoms | 53% | 51% |
Medical & Health | 53% | 46% |
Hospitality & Leisure | 50% | 52% |
Finance & Accounting | 46% | 44% |
Real Estate | 44% | 49% |
Agriculture | 44% | 50% |
Jo Morris, Head of Insight at Novuna Business Finance commented: "It is remarkable that so many small businesses have set out growth plans for 2022, given today's volatile market conditions and the severe challenges so many faced during the lockdown era. Whilst at face value this is most welcome news - the sector's reliance on finance to secure growth is a critical issue that must be tackled. It is also noteworthy that those enterprises expecting to expand the fastest are also those most in need of finance to support this."
"At Novuna Business Finance, we are serious about helping the sector. With an asset portfolio of more than £1.4bn, our simple and competitive funding is designed to fit around the needs of small businesses, helping customers to buy or lease business assets. With an expert team and award-winning services, we can provide access to the finance solution our customers need, helping them to develop and grow."
Note to editors
The research was conducted by YouGov among a representative sample of 1,196 small business decision makers during the first week of April 2022, spanning all key industry sectors.