UK SMEs Cheering Up as 2022 Looms: MarketFinance Survey

SMEs across the United Kingdom are somewhat optimistic consumer demand will soon rise, the results of a survey by fintech MarketFinance suggest. MarketFinance asked 2,000 SME owners across the UK about their outlook for 2022 and beyond, gauging their short and long-term plans for business investment and growth.

Despite lingering anxieties about the pandemic and a variety of economic and commercial issues, the majority of SMEs believe it is now imperative to begin building back from the crisis. They are ready to step up their business investment, with ambitious plans for recruitment, renewal of equipment and machinery, and both domestic and international expansion.

With many believing pandemic disruptions are now largely settled, 48 per cent of SMEs expect their turnover to stabilize or increase over the next 12 months. Similarly, 50 per cent expect demand for their products or services to stabilize or to increase over the next six months. The majority (63 per cent) expect their business to grow over the next three years.

With survival mode no longer a necessity and cash flow pressures beginning to ease, 70 per cent of SMEs now feel confident enough to increase business investment over the next 12 months. One-quarter plan to hire new staff, while 24 per cent expect to purchase new equipment and machinery. When asked how they were factoring borrowing into their investment plans, 23 per cent said access to a broader range of borrowing options could enable them to increase investment even further.

The research findings demonstrate borrowing will play a key role in recovery and growth, with 62 per cent of SMEs saying prudent borrowing could help them fund growth. However, 71 per cent of SMEs do not believe traditional banking products are the most obvious and convenient way to borrow for investment. Despite this lack of alignment between current finance needs and the options available through traditional routes, 37 per cent are looking to take on new borrowing facilities.

With confidence high and a sense of having moved beyond recovery and into a new stage of growth, many businesses are looking forward to seizing a host of opportunities in 2022, with 81 per cent planning to invest in sustainability, and 30 per cent considering merger and acquisition activity. For comparison 14 per cent are primarily focusing on organic growth.

One in three businesses already sell overseas or have plans to begin doing so. That figure is highest amongst the largest businesses surveyed by MarketFinance (turnover between £5-£6.5 million) but even amongst smaller enterprises significant numbers are focused on export.

“It’s clear the business environment has shifted and SMEs are looking ahead with a quietly confident and cautiously optimistic view,” MarketFinance CEO Anil Stocker said. “UK businesses intend to ramp up growth through domestic and international expansion, digital transformation and even M&A activity. But as they reset their post-pandemic goals for a post-pandemic, they’ll need to be confident of their funding base.”

“Given so many SMEs are looking outside of traditional routes in their search for finance, we’re particularly proud to have been accredited by the British Business Bank as one of the few alternative providers under The Recovery Loan Scheme. Schemes like the RLS are a golden opportunity for SMEs looking to gear up for growth, providing easily accessible funding at a lower cost across a wide range of products. We expect to see a large number of SMEs taking advantage of the scheme over the next six months as their growth and expansion efforts gain momentum and they invest in ambitious plans for 2022 and beyond.”

Since 2011, MarketFinance said it has advanced more than £2.6 billion worth of invoices and loans. MarketFinance strategic partners include Barclays Bank UK PLC, Tide, Equals Group and Ebury.

MarketFinance is backed by Barclays Bank UK PLC, Mouro Capital, Paul Forster (co-founder of European venture capital fund Northzone (invested in Klarna, iZettle and Trustpilot), Viola Capital and private equity group MCI Capital (also invested in iZettle, Azimo and Gett).

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