20 March 2023

  • 58% of SMEs credit their pandemic experience with increasing their resilience, as cost pressures replace the pandemic as SMEs’ primary concern.

  • SMEs’ medium-term investment intentions remain strong, despite growing caution in short-term behaviour as 50% have delayed immediate investment decisions.

New research—published today by Oxford Economics and in partnership with Funding Circle, including a detailed survey of Funding Circle customers¹—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).² 

"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.”

Lisa Jacobs

Chief Excecutive Officer, Funding Circle

Today’s 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. 


Notes to editors

¹Funding Circle and Oxford Economics surveyed c. 550 Funding Circle customers in January 2023. 

²ONS, ‘Business Insights and Conditions Survey (BICS)’, 2022

For more information


About Funding Circle

Funding Circle (LSE: FCH) is a lending platform for SME borrowers. Established in the UK in 2010, and now the leading lending platform to SMEs, the Group also has a material and growing presence in the US. Globally, Funding Circle has extended more than £15bn in credit to c.135,000 businesses. 

For SME borrowers, Funding Circle provides an unrivalled customer experience, delivered through its technology and data, coupled with a human touch. Its solutions continue to help customers access the funding they need to succeed. For institutional investors, Funding Circle provides access to an alternative asset class in an underserved market, and delivers robust and attractive returns. 

About Oxford Economics

Oxford Economics was founded in 1981 as a commercial venture with Oxford University’s business college to provide economic forecasting and modelling to UK companies and financial institutions expanding abroad. Since then, it has become one of the world’s foremost independent global advisory firms, providing reports, forecasts, and analytical tools on more than 200 countries, 100 industries, and 8,000 cities and regions.

Headquartered in Oxford, England, with regional centres in London, New York, and Singapore, and offices all over the world, Oxford Economics now employs more than 300 professional economists, industry experts, and business editors—one of the largest teams of economists and thought leadership specialists.