A study conducted by Novuna Business Finance has revealed that access to finance is a crucial concern for UK small businesses, with 53% indicating that their plans would be deferred if they failed to obtain the necessary funding.

The dependence on finance is most pronounced in the agriculture, media, and manufacturing industries, with respective figures of 63%, 60%, and 59%.

Businesses facing contraction or those struggling to stay afloat, both at 74%, also exhibit a high reliance on financial support.

The findings coincide with data from the Impact Investing Institute, indicating that the success rate for SME applications for bank loans decreased from 80% in 2018 to approximately 50% last year.

A Treasury select committee from the House of Commons also identified a challenging environment for SMEs that could discourage essential risk-taking and innovation, potentially stymying growth.

The potential growth initiatives at stake include hiring staff, launching new products and services, expanding offices, running marketing campaigns, and upgrading IT equipment.

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Specifically, a quarter of finance-dependent businesses said they would be unable to hire additional staff without securing funding. This challenge was especially pronounced in the education (47%) and media (32%) sectors.

When it comes to launching new offerings, 23% of finance-dependent businesses indicated they couldn’t proceed without funding. In the manufacturing sector, this figure spiked to 43%, more than four times the previous year’s 10% in Q2 2023.

Additionally, for the first time, Novuna’s data indicates that moving to larger premises has become a top priority for small businesses requiring investment, reflecting a shift towards in-office work.

Among finance-dependent businesses, 20% planned to move to bigger offices, with the media sector leading at 25%.

Marketing campaigns are also at risk, with 21% of businesses needing finance to execute their strategies, and this figure rises to 30% among those struggling to survive.

Lastly, the need to modernise IT infrastructure is a growing concern, with 17% of small business owners prioritising technological upgrades, a notable increase from 11% the previous year, especially within the legal sector (35%) and retail sector (33%).

Novuna Business Finance head of insight Jo Morris said “Access to finance is a lifeline for UK small businesses, yet many are finding this lifeline increasingly out of reach and struggling to manage their cash flow as a result.

“The ability to acquire new machinery or upgrade technology – importantly at the time it is needed – is vital to any small business’s growth and profitability. Any barriers to this risk not just stifling the future of an individual business but will also have a knock-on effect on the economy at large.”