The percentage of UK small businesses that rely on finance or funding in order to invest in business growth has reached an eight-year high and those most in need of it are the enterprises predicting significant expansion for the months ahead, according to new research by Novuna Business Finance.
The nationwide poll of 1,242 small business owners revealed that 58% of business owners said they would have to put one or more growth projects on hold in the coming months if they were unable to secure funding or finance to power their growth plans. This reliance on finance comes at a time when the ripple effect of geo-political disruption is making it harder for small business owners to forecast organic growth.
Nationally, the percentage of UK small business owners predicting growth for the three months to the end of June has fallen to a four-year low, (29%) with significant falls in the manufacturing, construction and retail sectors.
The Novuna data suggests that established and successful businesses were those most in need of funding in order to turbo-charge existing growth plans.
At a time when the government has backed a growth agenda for the fragile UK economy, the Novuna data suggests the projects small businesses will drop if they are unable to secure funding are the very initiatives that would support the economy at large such as job creation, expansion into new overseas markets and launching new products and services.
Around the UK, there was a year-on-year increase in the percentage of small businesses reliant on funding to power growth in six UK regions. The need for finance was strongest in the regions that are home to England’s three biggest cities:
- London (75%)
- The North West (65%)
- West Midlands (62%)
Joanna Morris, Head of Insight at Novuna Business Finance, said: “As we all reflect on the economic growth agenda that the government has committed itself to, our research makes two things very clear. First, access to finance is a key requirement of our most successful and most established small businesses; funding is not a plaster to prop-up a struggling business, it’s the catalyst needed to help fast growing businesses to realise their full potential. Second, our research makes clear the immediate and tangible impact of businesses not securing funding, job creation put on hold, product innovation delayed and plans to forge trade details abroad cancelled”
