Compare the best business loans and financing of 2023
Secure the finance you need to get your company off the ground or get it to the next stage of its evolution with a small business loan.
Read more…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.
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 |
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 |
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% |
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 |
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% |
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% |
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% |
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.
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