UK SMEs ready to power the post-pandemic recovery

25 March 2021

A new report has found that as the UK embarks on its roadmap out of lockdown, a significant proportion of small and medium enterprises (SMEs) will emerge with the capacity, need and desire to invest in their business and power the economic recovery.

  • SME appetite for growth finance at highest levels since 2016: 73% of businesses will require future finance, with more than 80% of this earmarked for investment. 

  • Government support has helped SMEs to adapt and diversify: more than half of Funding Circle CBILS borrowers used their loans to support their investment plans.

  • In 2020, SMEs borrowing through Funding Circle contributed £7.5bn to UK GDP and supported 100,000 jobs, demonstrating their strategic importance to the UK economy.  

A new report has found that as the UK embarks on its roadmap out of lockdown, a significant proportion of small and medium enterprises (SMEs) will emerge with the capacity, need and desire to invest in their business and power the economic recovery.

The research—published today by Oxford Economics and in partnership with Funding Circle—shows that the appetite for growth finance is at its highest levels since 2016.* 73% of Funding Circle customers say they require further finance, and four in ten expect to need this within 12 months. More than 80% said they would use these funds to invest in and grow their business. 

SMEs are ready to rebound from the crisis, having successfully pivoted and adapted their businesses, from increasing online presence to diversifying into new goods and services. Their ability to adjust has been aided by business support measures, including the Government’s Coronavirus Business Interruption Loan Scheme (CBILS), which helped lenders to continue providing ‘business-as-usual’ finance. The report reveals that more than half of Funding Circle CBILS borrowers used their loans to support their investment plans. 

Lisa Jacobs, Europe Managing Director at Funding Circle said: “With the path to recovery only just beginning, this report shows demand from small businesses for finance is set to remain strong for the foreseeable future. Fast and simple funding will be essential to give these businesses the required firepower to invest and grow. I’m proud of Funding Circle’s role in providing this to date and we’ll continue to be there to support small businesses as they drive the recovery.”

The speed and strength of governments’ response to supporting SMEs through Covid-19 reflects their strategic importance to the global economy; accounting for 70% of employment and 50-60% of GDP.** Additionally, SMEs have been responsible for 70% of all new job creation in the UK since 2010.*** The report highlights the scale of their impact and role as the engine of economic growth. In 2020, UK SMEs borrowing through Funding Circle contributed £7.5bn to UK GDP and supported 100,000 jobs. This increases to £10bn in GDP contribution and 135,000 jobs when including lending to small businesses through Funding Circle in the US.

Over the last decade, FinTechs have brought more choice and competition to the SME finance market than ever before. Covid-19 has accelerated the adoption of digital services, with searches for online business loans increasing more than 5 times in 2020.**** As more SMEs turn to borrowing online, Funding Circle is revolutionising their experience, with its Instant Decision Lending technology now servicing 50% of all loan applications. With an average application time of six minutes and lending decisions in nine seconds, there has never been an easier way for small businesses to access finance.***** Once businesses switch to using Funding Circle, they rarely look back; 86% of first-time online borrowers said they would come back to the platform first in future.

Economic Impact of SME lending through Funding Circle, 2020

 

Economic Impact  (2020)

UK

Global (UK & US)

GDP

£7.5bn

£10bn

Jobs

100,000

135,000

Tax revenue

£2.0bn

£2.8bn

 

- ENDS -

For more information:

Funding Circle:

press@fundingcircle.com; +44 (0) 203 667 2245

Notes to Editors

About the research

 

Sources

**SME Finance Monitor Q4 2020 (March 2021): BVA BDRC. In Q4 2020, 37% of SMEs said they were happy to use finance to grow their business, the highest since 2016 (43%)

**OECD 2019 - SME and Entrepreneurship Outlook 2019. SMEs account for 50 - 60% of value added across the OECD region

*** Bank of England (2019) ‘Future of Finance’ 

****Google Trends

*****Funding Circle: Half Year 2020 Results, September 2020

About Funding Circle

Funding Circle is the UK’s largest loan platform for SMEs. Founded in 2010 in the aftermath of the Global Financial Crisis, when small businesses struggled to access finance through traditional channels, a wide range of investors have directly lent more than £11.5 billion to approximately 100,000 businesses globally. By combining a decade of investment in machine learning technology with dedicated SME expertise, borrowers can access fast and simple finance, with a seamless customer experience. 

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, 250 industrial sectors, and 7,000 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 250 professional economists, industry experts, and business editors—one of the largest teams of economists and thought leadership specialists

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