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Business loan statistics and trends 2023

What are the latest statistics on lending to SMEs and small businesses?

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By

Emily Herring

Updated

Fact checked

Businesses all over the UK sometimes require outside funding in the form of a business loan, whether it’s to invest in growth or maintain daily operations. We look at the most recent business loan statistics and trends, and how lending to small businesses and small to midsized enterprises (SMEs) has changed over the years.

Quick overview

  • The total value of business loans is expected to be £513 billion in 2023.
  • Bank lending to SMEs was £65.1 billion in 2022, a rise of 12.8% from 2021.
  • Bank lending to SMEs in 2022 was the second-highest on record after 2020.
  • The average small business loan was £14,000 in 2022, up from £10,000 in 2021.
  • Gross repayments from SMEs totalled £73.6 billion in 2022.
  • Over half (53%) of SMEs that applied for finance did so to help with working capital.
  • Four-fifths (80%) of SMEs accepting finance are not concerned about their ability to repay.

What is the value of business loans in the UK?

The value of business loans is expected to rise to £513 billion by 2023. This is £78 billion higher than the value of business loans in 2018, an increase of 18%. The projected value of business loans has increased steadily year on year.

Year Loan value (£ billions)
2018 435
2019 449
2020 464
2021 479
2022 496
2023 513

Small business and SME lending statistics

Gross lending, excluding overdrafts to small and medium-sized enterprises (SMEs), by all banks was £65.1bn in 2022. This rose by 12.8% compared to 2021 and is higher than every year between 2012 and 2019.

However, SME lending in 2022 remained below the record high of 2020 (£105bn), which was largely driven by government-guaranteed Covid-19 loans.

Total repayments by SMEs were around £8.5 billion higher than gross lending in 2022, with £73.6 billion made in gross repayments.

Total repayments by SMEs were also around £7.9 billion higher than in 2021 and £16.7 billion higher than in 2020. The higher level of loan repayments in 2022 may partly be due to businesses starting to pay back recovery loans and other coronavirus-related loans.

Year Value of lending (£ billions) Value of SME repayments (£ billions)
2018 57.8 57.2
2019 56.9 54.7
2020 104.9 56.9
2021 57.7 65.7
2022 65.1 73.6

How many SMEs apply for finance?

A smaller number of SMEs (39%) applied for external finance in 2022 than in the previous 3 years. The percentage of SMEs seeking finance was highest in 2020 (60%) and 2021 (59%), most likely due to additional pressure caused by the coronavirus pandemic.

Year Percentage applied for external finance
2019 44%
2020 60%
2021 59%
2022 39%

What is the average small business loan amount?

The average value of finance sought by SMEs was £14,000 in 2022, up from £10,000 in 2021. Businesses with no employees, such as sole traders, had a lower median loan value in 2022 at £10,000, while SMEs with employees had a higher median loan value at £25,000.

Year All firms No employees SME employers
2022 £14,000 £10,000 £25,000
2021 £10,000 £10,000 £25,000

What is the loan approval rate for small businesses?

In 2022, 64% of SMEs were offered all the finance they sought from the first provider, while a further 12% were offered a smaller amount. This is a big decrease from the previous 4 years, in which 80% or more of SMEs were consistently offered all the finance they applied for.

Year Initial finance provider approval rate
2018 82%
2019 84%
2020 84%
2021 80%
2022 64%

What are the main reasons SMEs apply for a loan?

There are a variety of reasons SMEs apply for external finance, but the main one is to obtain working capital. This is the money businesses use in day-to-day trading operations and is the difference between current assets and liabilities.

The next most popular reasons for seeking finance were to fund the purchase of fixed assets and to invest in business growth.

Nearly a quarter (23%) of SMEs who applied for finance did so as a means to deal with recovery, while just 7% were looking for a loan to help with refinancing.

Reason for seeking finance Percentage
Working capital 53%
Purchase of fixed assets 27%
To invest in business growth 27%
To deal with recovery 23%
Refinancing 7%

Do SMEs feel able to repay their business loans?

Four-fifths (80%) of SMEs do not feel concerned about their ability to repay the finance they had accepted from external lenders, while 1 in 6 SMEs (17%) did express some concern about their ability to repay.

Do you feel concerned about repaying the loan? Percentage
Very concerned 6%
Fairly concerned 11%
Not very concerned 25%
Not all concerned 55%
Don’t know/refused 3%

How many external finance providers do SMEs consider?

In 2022, almost 1 in 3 (32%) of SMEs were considering more than one finance provider. This is an increase from 1 in 5 (20%) in 2021.

The total number of SMEs considering external providers also increased overall in 2022, with 91% thinking about at least one finance provider, compared to 85% in 2021.

Sources

Bank of England
EY
British Business Bank
Statista
UK Finance

Click here for more research. For all media enquiries, please contact:

Matt Mckenna
UK communications manager
T: +44 20 8191 8806
matt.mckenna@finder.com@MichHutchison/in/matthewmckenna2

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