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Business Finance Statistics
2024
Sections
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- Key business finance statistics
- Most popular types of business finance
- % of businesses using business finance
- Business finance by sector & SME size
- Business finance interest rates
- Big 5 banks vs challenger banks
- The important of business finance brokers
- Application success rates by finance type
- The growth of asset finance
- Sources
Jump to section:
- Key business finance statistics
- Most popular types of business finance
- % of businesses using business finance
- Business finance by sector & SME size
- Business finance interest rates
- Big 5 banks vs challenger banks
- The important of business finance brokers
- Application success rates by finance type
- The growth of asset finance
- Sources
35% of SMEs in Q2 2024 were permanent non-borrowers.
39% of overdraft applications and 56% of bank loan applications are not successful. This compares to just 4% for asset finance.
25% of businesses using finance said some or all of their borrowing was secured.
The success rates for SME loan applications at the seven largest banks in Q2 2023 were down sharply to 45%, compared to a pre-pandemic average of 82%.
30% of small business owners and managers used personal savings, credit cards, or personal loans for cash flow.
51% of smaller businesses only approach their main bank when seeking finance.
£59.2 billion lent to SMEs
Gross bank lending to SMEs was £59.2bn in 2023, a 9% reduction on 2022.
Only 44% of loans are approved
56% of bank loan applications are not successful
43% of SMEs use finance
In Q2 2024, 43% of SMEs were using external business finance, including pandemic funding.
20% of SMEs use credit cards
Credit cards account for 20% of business finance used, more than any other finance type.
1 in 5 still repaying Covid finance
Approximately 20% of SMEs were still repaying pandemic funding at the start of 2024.
What are the most popular types of business finance?
Credit cards are the most popular type of business finance.
In the recent SME finance monitor survey, credit cards were the most popular form of business finance with 20% of respondents saying they used business credit cards in Q3 2023.
Overdrafts have followed a similar trajectory, with the proportion of SMEs using them increasing from 9% in Q4 2022 to to 17% in Q4 2023 before dropping back to 13% at the start of 2024.
Equity or loans from directors, family or friends increased to 10% of all business finance used.
What proportion of SMEs use business finance?
43% of all SMEs were using some form of external finance in Q2 2024, a decrease of 50% from Q3 2023.
Three in ten SMEs sought external finance in the past three years (2020-23).
28% of SMEs took government-backed pandemic funding and 74% of them had not paid it off by Q2 2024.
14% of SMEs using finance of any type are worried about repaying their borrowing (Q2 2024). This is the equivalent of 5% of all SMEs.
20% of small businesses that are repaying government-backed pandemic funding are concerned about paying it back (Q2 2024).
Which business sectors use finance the most?
43% of all SMEs were using some form of external finance in Q2 2024. That is down from 50% in Q3 2023.
65% of SMEs with 50-249 employees used some sort of external finance.
Three in ten SMEs sought external finance in the past three years (2020-23).
54% of hospitality businesses took pandemic funding and 79% of them had not paid it off by Q2 2024. This was the highest for any sector.
Agriculture has the highest % of businesses borrowing over £25K.
28% of SMEs took government-backed pandemic funding and 74% of them had not paid it off by Q2 2024.
What are the effective interest rates of new SME loans?
The effective interest rates on fixed rate and floating rate (LIBOR or BOE linked) SME loans has started to fall in 2024.
43% of commercial lenders reported that the elevated interest rates had directly led to a decrease in their lending in 2023.
The effective floating rate peaked at 8.04% in May 2024.
The effective fixed rate peaked at 7.02% in July 2023.
Big 5 banks vs challenger banks
Challenger and specialist banks continue to lend significantly more than the big 5 banks and their subsidiaries.
In 2023, 59% (£34.8 Bn) of all gross lending to businesses came from challenger and specialist banks. This is a significant increase from their 27% market share of lending in 2014.
Challenger and specialist banks have lent more to UK businesses than the big 5 banks and their subsidiaries every year since 2020. This trend is likely to continue.
Between 2014-2024, 60 new banking licenses have been approved, of which 36 were to banks supporting small businesses.
The importance of broker facilitated finance
Broker facilitated finance remains key for many lenders.
69% of lending to smaller businesses by surveyed lenders was through commercial intermediaries.
In 2023, NACFB broker Members arranged £38 billion in lending and 93% of brokers facilitated transactions through challenger banks in 2023.
The NACFB reported their member brokers reported 32% of SMEs were successfully funded via brokers in 2023, up 10% on the year before.
How many business finance applications are rejected?
Asset finance has the highest approval rates by far.
96% of asset finance applications were successful compared to just 61% of overdraft applications.
Only 44% of bank loan applications are successful.
The success rates increase with the size of the business.
Businesses with no employees had an average success rate across all lending products of 53%, whilst SMEs with 50-249 employees had an average finance application success rate of 91%.
What is asset finance used for?
Asset financing grew 7% in 2023 and accounted for 40% of gross external business lending (£21.9 billion of £55.3 billion in gross lending).
The book size of the asset industry rose 7.1% to £44.5 billion in 2023.
This is now the third annual rise following an increase of 11% in 2022 and 23% in 2021.
Asset finance is becoming a major source of business funding having grown 14% in real terms from 2014 to 2023.
One reason for the growing popularity of asset finance is due the very high application success rates which have now increased to 96%.
The Finance & Leasing Association (FLA) estimates that asset finance is used in approximately 40% of business investments in vehicles, machinery, and equipment.
Data Sources
SME Finance Monitor (BVA BDRC)
Majority of their data is based on a total of 17,010 interviews with SME that took place throughout 2023.
SME Finance Survey by the British Business Bank
The 2023 survey is based on 1,723 SME interviews with fieldwork conducted between 14th Sept 2023 and 11th December 2023
UK Finance Business Finance Review Q2 2024
Published September 2024
National Association of Commercial Finance Brokers (NACFB) Survey – 2023
Published Feb 2024. Survey of 2,400 commercial brokers and 155 lenders.
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