The latest research indicates that financial constraints have forced nearly a third of UK SMEs to halt key business operations.
- A study commissioned by Manx Financial Group reveals the pressing issue of limited access to finance affecting SMEs.
- Hiring, marketing, and expansion initiatives are the most common activities paused by SMEs due to financial hurdles.
- The current financial climate presents significant barriers, with loans being costly and terms inflexible.
- Despite current challenges, SMEs remain optimistic about growth in sales, new markets, and products over the next year.
The latest research commissioned by Manx Financial Group underscores a persistent challenge faced by UK small and medium-sized enterprises (SMEs): inadequate access to financing. Nearly a third (31%) of these businesses have had to pause or stop crucial operations, such as hiring, marketing, and market expansion, due to financial limitations. Although this figure has decreased from 40% in 2023, the issue remains substantial.
This research identifies the most prevalent obstacles in securing external finance: prohibitive costs (34%), lengthy processes (25%), and rigid repayment terms (25%). Additionally, 21% of SMEs reported that lenders often lack an understanding of their business needs, further complicating access to financing.
Douglas Grant, CEO of Manx Financial Group, highlighted the gravity of these challenges, noting that limited financing poses serious risks to the UK economy, given SMEs’ significant role in contributing to private sector turnover. He emphasised the urgent need for innovative solutions to bridge this financial gap, citing the high borrowing costs and unstable economic environment.
For the future, SMEs have expressed a sense of optimism about potential growth areas such as sales, new market ventures, and product development. An anticipated 29% growth is expected if appropriate external financing can be secured, a notable increase from 19% in the previous year.
The findings urge the necessity for government intervention to support these critical contributors to the economy. A permanent, government-backed loan scheme tailored to the diverse sectors of SMEs could be instrumental in driving economic recovery, especially during these uncertain times marked by geopolitical tensions and a tight labour market.
The challenges of securing finance for UK SMEs underscore the need for innovative solutions and government support to sustain economic growth.
