Business banking statistics

Running a business is not easy, and with 1 in 5 small and medium-sized enterprises (SMEs) failing in their first year, keeping on top of your business finances is a top priority. We looked into what UK business owners want from their business banking accounts and how many SMEs there are in the UK.

Quick overview

• Online banking (64%) is the most important feature for UK business account holders.
• 4 in 10 (43%) UK business account holders have never switched banks and do not intend to switch in 2022.
• 3 in 10 (29%) British business account holders do intend to switch in 2022.
• There are 5.5 million SMEs in the the UK.
• SMEs represent 99.2% of the total businesses in the UK.
• Half of SMEs (49%) seek investment for working capital purposes.
• Gross lending to SMEs reached £5.2 billion from monetary financial institutions in July 2022.

What banking account features are important to business banking account holders

Our survey found that two-thirds (64%) of business banking account holders say online banking is the most valuable feature of their accounts. This is just ahead of having a mobile banking app (62%) and shows that having a desktop feature is just as important for business account holders as having a mobile app.

Cost of transaction fees (58%), level of customer service (58%) and cost of the monthly account fee (56%) follow as the top 5 most important features for business banking account holders.

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Business banking account holders switching intentions

Our 2021 survey found that over 4 in 10 (43%) business account holders have never switched their business accounts and do not intend to switch in 2022. The 3 in 10 (29%) business banking account holders looking to switch in 2022 will likely be looking for banking alternatives that offer some of the top 5 important account features.

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Small businesses and medium-sized enterprises (SMEs) in the UK

The majority of businesses operating in the UK are classed as SMEs, meaning they have less than 250 employees and a turnover of less than €50 million annually. As of 2022, SMEs make up 99.2% of all businesses in the UK.

Number of small and medium-sized enterprises in the United Kingdom in 2021, by sector

The construction sector has the most SMEs in the UK out of all sectors, with over 913,000 small businesses active. With the construction industry containing roles such as plumbers, electricians, bricklayers and carpenters, it is popular for those in the sector to operate as sole traders.

This is followed by professional, scientific & technical activities, with over 848,000 SMEs operating in the UK. Wholesale & retail trade (555,000), administrative & support services (464,000) and information & communication (352,000) follow as the largest SME sectors.

Production activities (29,00) is the sector with the fewest SMEs in the UK, followed by financial & insurance (97,000), real estate (133,000), manufacturing (138,000) and agriculture, forestry & fishing (152,000).

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Gross lending to SMEs by financial institutions

Gross lending to SMEs by financial institutions reached its highest level of the past 2 years in September 2020, at £6.8 billion. In 2022, gross lending reached its highest level in May, at £5.5 billion, which is 21% less than in September 2020.

The most recent figure in July 2022 shows that gross lending to SMEs stood at £5.2 billion.

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Date	Amount lent to SMEs from monetary financial institutions
2020 Aug	£6,670,000,000
2020 Sep	£6,844,000,000
2020 Oct	£6,638,000,000
2020 Nov	£6,394,000,000
2020 Dec	£5,118,000,000
2021 Jan	£5,283,000,000
2021Feb	£5,127,000,000
2021Mar	£5,444,000,000
2021 Apr	£4,751,000,000
2021 May	£4,672,000,000
2021 Jun	£4,947,000,000
2021Jul	£4,442,000,000
2021 Aug	£4,502,000,000
2021 Sep	£4,311,000,000
2021 Oct	£4,619,000,000
2021 Nov	£4,669,000,000
2021 Dec	£4,908,000,000
2022 Jan	£4,874,000,000
2022 Feb	£5,319,000,000
2022 Mar	£5,104,000,000
2022 Apr	£5,120,000,000
2022 May	£5,509,000,000
2022 Jun	£5,000,000,000
2022 Jul	£5,212,000,000

The main reasons why SMEs seek investment

In 2021, the main reason why SMEs were seeking investment was for working capital, with almost half (49%) wanting more money for day-to-day operations. In order to get through the COVID-19 pandemic, 38% of businesses sought outside investment to help keep their businesses running. Other reasons for seeking investment were to provide financial security (24%), to purchase fixed assets (18%) and to invest in goods and services (9%)

Only 5% of SMEs said they sought finance to invest in processes and to undertake R&D (5%).

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Main reason for seeking finance	Percentage
Working Capital	49%
To deal with Covid -19 pandemic	38%
To provide financial security	24%
Purchase of fixed assets	18%
Invest in goods or services	9%
To fund expansion	8%
Digital Investment	6%
Improvement to premises	6%
Invest in processes	5%
Undertake R&D	5%

Reasons for not applying for finance

Fear of rejection and economic conditions (both 41%) were the main reasons why SMEs did not apply for finance in 2021. Fear of rejection has increased by 13 percentage points from 2020.

Economic conditions, such as the COVID-19 pandemic, caused many investors to hold their capital during a tough period for economic growth. Avoiding additional debt (36%) is the third reason, with interest on repayments increasing over time.

Interestingly, almost 1 in 5 (19%) of SME business owners say their poor credit history is a reason for not applying for finance. It is important when having a lower credit score or poor credit history to only apply for cards that you will get accepted for. Link to https://www.finder.com/uk/business-credit-cards/business-credit-cards-for-bad-credit

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Reasons for not applying for finance	2021	2020
Fear of rejection	41%	28%
Economic conditions	41%	19%
Avoid additional debt	36%	39%
Uncertainty of future due to Covid-19	31%	33%
Lower forecast/sales revenue	29%	16%
Unsure where to find appropriate finance	20%	9%
Poor credit history	19%	6%
Too expensive	18%	16%
Provider seemed reluctant to lend	14%	15%

Sources

Office of National Statistics

Statista

SME Finance Survey, British Business Bank

For all media enquiries, please contact

Matt Mckenna
UK Communications Manager
T: +44 20 8191 8806