Only 13% of SMEs in the UK relied on high street banks to finance their business in the last 12 months, Hitachi Capital’s quarterly British business barometer found.
Out of the 1005 small business executives interviewed in February, 54% responded that they injected their own cash into the business.
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The barometer found that almost one in four businesses (23%) moved to asset finance, operating or finance lease.
Asset finance has been the main source of finance over the last 12 months for businesses with a turnover between 1-10million (44%), while companies with a turnover of £10million+ are spreading their finances with 40% relying on cash, 33% on Asset Finance, 32% on a standard business loan and 30% finance their business via an overdraft.
Gavin Wraith-Carter, general manager at Hitachi Capital Business Finance said: "It’s encouraging to see that SME’s are showing a greater confidence in the UK economy and finding the impetus they need to drive growth for their business. Key to supporting this drive is providing the funding they require to achieve their ambitions. For too many years, small businesses have been hindered by the restrictive terms imposed by UK banks and, as the research suggests, alternative forms of finance are becoming a vital life line to achieve continued expansion."
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By GlobalDataManufacturing: Although the manufacturing sector has mainly used cash (40%) to finance their business in the last 12 months, this sector has relied more on the traditional high street bank loan than any other sector, with almost one in four (22%) opting for this source of finance over the last 12 months.
Transport and Distribution: Asset Finance (64%) was the main finance of choice over the last 12 months, with only 22% opting for funding via the high street bank.
Construction: This sector relied more than any other sector on overdraft (35%), although 13% said that they had to use family money over the last 12 months.
Agriculture: This sector relied heavily on funding via Government support (21%) and less so on asset finance than any other sector (14%).
