Research: The financial strategies of UK SMEs

• 71% of SME decision-makers reported using their personal finances to fund business growth this year, up from 68% in 2023
• Over half (54%) reported using their personal credit card or personal savings (53%), and 39% reported using a personal loan 
• More SMEs are accessing alternative finance this year (78%) compared to last year (73%)

Research from Shawbrook has shed light on the financial strategies employed by key decision makers at small and medium-sized enterprises (SMEs) in the UK, revealing that 71% have resorted to using a form of personal finance to fund their business.

Among those surveyed, over half admitted to using personal credit cards (54%) or savings (53%), with 39% even saying they had used a personal loan to fund their business. Compared to Shawbrook’s research from last year, the percentage of those resorting to personal savings for business purposes has increased by 15%, personal credit cards by 13%, and personal loans by 8%.

Perhaps most concerningly, even those on the larger side of the SME scale are using their personal finances to fund their business, with 55% of those working at a business with 100-249 employees using their personal credit card, 49% using personal savings and 42% using a personal loan.

However, encouragingly SMEs are also considering other forms of finances to support their ambitions. The research also revealed a huge 78% accessing alternative finance, increasing from 73% in 2023, as businesses look for new ways of funding growth. Indeed, we found more decision-makers reportedly using products such as invoice finance (56%, up from 48%), asset finance (47%, up from 43%), asset-based loans (39%, up from 38%) and commercial loan facilities (45%, up from 44%) this year compared to 2023.

Nearly three-quarters of business leaders (73%)[1] are reportedly concerned about the rising cost of running their business this year, which also came out as the top concern in last year’s research (69%). Our findings make clear that many business leaders are still feeling the effects of, and contending with, the ongoing difficult landscape, and looking at all options to finance their growth.

^{[1] “Very concerned” and “Somewhat concerned” answers combined}

Neil Rudge continued:

"SMEs are undoubtedly the backbone of the UK economy, making up 99.9% of all businesses in the UK, accounting for three-fifths of the employment and around half of turnover in the UK private sector . As the government looks to get the economy back on track, it’s crucial that this cohort is not left behind. 

“The uptick seen in those utilising alternative forms of finance is an indicator that we are heading in the right direction, with more SMEs finding solutions through specialist providers. SME finance can be sophisticated and complex, so working with a specialist lender that has the experience and resources to offer a high level of service and bespoke packages will ensure businesses can find the right finance for their plans."

Research Methodology

2024 research: The research was conducted by Censuswide, among a sample of 506 full time senior financial decision makers (CFOs, FDs, MDs, CEOs) or business owners of Small and Medium Sized Businesses (with a turnover between £5m and £50m). The data was collected between 5th April 2024 – 12th April 2024. Censuswide abides by and employs members of the Market Research Society and follows the MRS code of conduct and ESOMAR principles. Censuswide is also a member of the British Polling Council.

2023 research: The research was conducted between the dates 9th August 2023 and 8th September 2023 by Censuswide. The respondents were 500 full-time senior financial decision-makers (CFO’s, FD’s, MD’s and CEO’s) or owners at Small and Medium Enterprises in the UK whose annual turnover was less than £501 million. Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles.