UK SMEs Demonstrate Resilience as they Prepare for Future Business Operations, Research Reveals

New research— recently published by Oxford Economics and in partnership with Funding Circle (LSE:FCH), including a detailed survey of Funding Circle customers—reveals UK SMEs’ durability, with 58% of respondents “saying their experience of dealing with the pandemic’s challenges has made their business more resilient.”

Over the past year, increasing costs have “replaced the pandemic as the primary challenge facing SMEs.”

37% of respondents “cited non-energy costs—with a further 8% citing energy prices—as the most significant issue they face.”

Nearly a fifth (18%) cited “falling customer demand, and 8% supply chain disruption.”

At the same time, 42% of respondents said “that withdrawing from the EU has had a negative impact on their business.”

Half of SMEs (49%) expect “to seek external finance over the coming year, with a further 29% expecting to raise finance from 2024 onwards, suggesting that medium-term growth ambitions remain stable. 80% of these finance-seeking firms will do so for investment and growth purposes.”

Although half of SMEs reported “they had paused, delayed or cancelled an investment decision in 2022 due to economic conditions, 36% of SMEs are feeling more confident about the next 12 months than they were at the same time this year, with a further 36% reporting the same confidence levels.”

SMEs have been able “to take a wait-and-see approach due to their cash holdings, which—outside of the smallest cohort of SMEs—remain elevated. ONS data reveals that the percentage of SMEs with more than six months of cash reserves increased to 42% by H2 2022 (up from 40% in H2 2021).”

Lisa Jacobs, Chief Executive Officer, Funding Circle, said:

“Today’s research shows that despite the challenges thrown at them, the UK’s SMEs continue to demonstrate their resilience time and again. It’s encouraging to see so many business owners feel they have gained vital experience from navigating the pandemic, and are now thinking of their future. As economic conditions ease, it’s vital that small businesses are able to access the funding they need to achieve their growth ambitions.”

The research also shows “that in 2022, loans through Funding Circle’s platform reached businesses in each of the 650 Parliamentary constituencies in the UK, with an average of £1.6m of lending per constituency.”

In 2022, Funding Circle’s loans under management “contributed a total of £6.9bn to UK GDP, supported 106,000 jobs and generated £1.4bn in tax.”

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