Green shoots of recovery: Resilient SMEs poised for future growth, shows new research

• 78% of SMEs felt the economic challenges they faced during the year increased the resilience of their business
• Increasing number of SMEs reported 'no concerns' for their business and 88% felt equally or more optimistic when looking at the next 12 months
• Access to finance remains crucial to growth with 77% expecting to need additional support in the future

New research - published by Oxford Economics in partnership with Funding Circle, based on a detailed survey of Funding Circle customers¹ - finds that small and medium sized enterprises (SMEs) are showing increased resilience and optimism despite the ongoing headwinds.

SMEs continue to face a challenging economic climate whilst recovering in a post-pandemic environment, with 45% of SMEs reporting that they had paused, cancelled or delayed an investment in 2023. However, the strength of SMEs prevails with more than three quarters of SMEs surveyed (78%) reporting that these challenges taught them valuable lessons and that, rather than weakening their prospects, this had increased the resilience of their businesses.

The research also points to early signs of growing confidence among SMEs in their future survival and growth prospects. Among those surveyed, 88% of SMEs have the same or more confidence in their business performance over the next 12 months, compared to the previous year. This aligns with ONS data showing a 9 percentage point rise - from 12% to 21% - in the number of small businesses reporting 'no concerns' for their business at the end of 2023 compared with a year earlier².

However, in order to unlock their growth potential, 77% expect to need to access additional finance in the future, with more than half of all firms (52%) expecting to do so in the coming 12 months - a three percentage point increase from a year ago. Of those, 73% expect to use this additional funding for investment and growth.

Lisa Jacobs, Funding Circle's Chief Executive Officer, said:

"Day in, day out we see remarkable innovation and adaptation from SMEs dealing with a multitude of challenges and economic uncertainty. It is encouraging to see some green shoots as increasing numbers of small businesses are reporting plans to expand over the coming year, which will be beneficial for our communities, jobs and the whole UK economy. Funding Circle looks forward to backing these businesses and supporting their growth with much needed finance."

The research also shows that lending through Funding Circle in 2023 reached businesses in every corner of the UK, including across each of the UK's 650 Parliamentary constituencies, with an average of £1.5m per constituency. In 2023, Funding Circle's loans under management supported a £6.9bn total contribution to UK GDP, sustained over 95,800 jobs, and was associated with activity stimulating £1.6bn in tax revenues.

To find out more, please visit Funding Circle's Impact Report

ENDS

Notes to editors

¹ Funding Circle and Oxford Economics surveyed c. 430 Funding Circle customers in January 2024.

² ONS: Business Insights and Conditions Survey (BICS), December 2023.

About Funding Circle

Funding Circle is a lending platform for small business borrowers. Established in the UK in 2010, and now the leading lending platform to SMEs, Funding Circle has provided £16.9bn in loans to c.150,000 businesses globally.

For small business borrowers, Funding Circle provides a leading-edge customer experience, delivered through its technology, machine learning, and data science, coupled with a human touch. Its solutions continue to help customers access the funding they need to succeed. For lending investors, Funding Circle provides access to an alternative asset class in an underserved market, and delivers robust and attractive returns.

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