Businesses all over the UK sometimes require outside funding in the form of a business loan, whether to invest in growth or maintain daily operations. We look at the most recent business loan statistics and trends and how lending to small businesses and small to midsized enterprises (SMEs) has changed over the years.
In 2023, a total of £516 billion was lent to businesses in the UK, down slightly from £553 billion lent in 2023. Business loans peaked in 2020 during the coronavirus pandemic, with £653 billion lent in total.
| Year | Business loan value (£ billions) |
|---|---|
| 2023 | £516.47 |
| 2022 | £553.30 |
| 2021 | £480.81 |
| 2020 | £653.35 |
| 2019 | £518.73 |
| 2018 | £545.26 |
| 2017 | £516.49 |
| 2016 | £468.98 |
| 2015 | £410.89 |
| 2014 | £379.89 |
Lending to small and medium-sized enterprises (SMEs) by all banks was £59.2 billion in 2023, down from £65.1 billion in 2022.
Loan repayments by SMEs were higher than loans granted in 2023, at £68.51 billion. This is the third year that repayments have been higher than lending, following the significant lending seen in 2020.
| Year | Gross bank lending to SMEs (billions) | Gross repayments from SMEs (billions) |
|---|---|---|
| 2023 | £59.17 | £68.51 |
| 2022 | £65.12 | £73.51 |
| 2021 | £57.71 | £65.75 |
| 2020 | £104.87 | £57.91 |
| 2019 | £56.94 | £54.83 |
The team at Funding Options by Tide shared exclusive insights with Finder on the trends they saw among their customers in 2023, which we are likely to see continuing into 2024. We’ve outlined these statistics below:
They also shared the top 5 industries seeking business financing, which were:
Fewer SMEs applied for external finance in 2023 compared to 2022, with just 3 in 10 (30%) seeking this opportunity, down from around 4 in 10 (39%). This number is the lowest it has been in the last 5 years, with 44% applying for finance in 2019, 60% in 2020 and 59% in 2021.
| Year | Number of SMEs applying for finance |
|---|---|
| 2019 | 44% |
| 2020 | 60% |
| 2021 | 59% |
| 2022 | 39% |
| 2023 | 30% |
The average value of finance sought by SMEs was £14,000 in 2022, up from £10,000 in 2021. Businesses with no employees, such as sole traders, had a lower loan value of £10,000, while SMEs with employees had a higher loan value of £25,000.
In 2023, there was an increase in the number of firms seeking finance with a value of £25,000 or more, with 39% of businesses looking for this larger number. 34% of businesses wanted a loan of less than £10,000, while a quarter of businesses (25%) were looking for financing between £10,000 and £25,000.
Acquiring working capital is the most popular reason for seeking finance among SMEs, with almost two-fifths giving this as a driving reason (58%). The next most common reason is the purchase of fixed assets (31%), followed by investing in business growth (28%). Less popular reasons include reducing carbon emissions (7%) and dealing with energy costs (8%).
| Reason for seeking finance | Percentage |
|---|---|
| Working capital | 58% |
| Purchase of fixed assets | 31% |
| To invest in business growth | 28% |
| To develop or introduce new products, processes or services | 20% |
| To deal with recovery | 18% |
| Refinancing | 17% |
| To deal with energy costs | 8% |
| To reduce carbon emissions | 7% |
1 in 5 SMEs (22%) feel any level of concern about repaying their finance offer, and just 3% are very concerned about doing so. This number is up from 2022 when only 1 in 6 SMEs were concerned about repaying their finance offer.
| Do SMEs feel concern about repaying finance? | Percentage |
|---|---|
| Not all concerned | 57% |
| Not very concerned | 18% |
| Fairly concerned | 19% |
| Very concerned | 3% |
| Don’t know | 3% |
The government-backed Growth Guarantee Scheme aims to improve the terms of business loans on offer
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