SME - Small and Medium Exterprise wording
Challenger Banks Europe Lending

Increasingly Confident UK SMEs Are Ready To Invest in Business Growth

In the face of the looming economic and commercial uncertainty brought about by the pandemic, SMEs see now as the time to step up their business investment with ambitious plans for recruitment, renewal of equipment and machinery, and both domestic and international expansion.

MarketFinance asked 2,000 SME owners across the UK about their outlook for 2022 and beyond, gauging their short and long-term plans for business investment and growth.

What the fintech business lender discovered from its survey has been documented in this recently released report, details of which we’re going to expand upon here.

  • Confidence

As SME business confidence improves and pandemic disruptions slowly begin to quell, many firms are now focussed on recovery and growth. 48% of SMEs expect their turnover to either stabilise or increase over the next 12 months, 50% expect demand for their products or services to stabilise or to increase over the next 6 months, and the majority of SMEs (63%) expect their business to grow over the next 3 years.

  • Investment

With survival mode no longer a necessity and cash flow pressures beginning to ease, 70% of SMEs feel confident enough to increase business investment over the next 12 months. 25% of SMEs plan to hire new staff, while 24% expect to purchase new equipment and machinery. When asked how they were factoring borrowing into their investment plans, 23% of SMEs said access to a broader range of borrowing options could enable them to increase investment even further.

  • Borrowing

Borrowing will likely play a key role in recovery and growth with 62% of SMEs saying that prudent borrowing could help them fund growth. However, 71% of SMEs do not believe traditional banking products are the most obvious and convenient way to borrow for investment. Despite this lack of alignment between current finance needs and the options available through traditional routes, 37% of SMEs are looking to take on new borrowing facilities.

  • Growth

With confidence high and a sense of having moved beyond recovery and into a new stage of growth, many businesses are looking forward to seizing a host of opportunities in 2022. 81% of SMEs surveyed plan to invest in sustainability, while 30% say they are considering merger and acquisition activity in the year ahead, more than twice as many as the 14% that are primarily focusing on organic growth. 34% of businesses say they already sell overseas, or have plans to begin doing so. That figure is highest amongst the largest businesses surveyed that typically produce a turnover of between £5 million and £6.5 million, but even amongst smaller enterprises significant numbers are focussed on export.

Anil Stocker, CEO, MarketFinance
Anil Stocker, CEO, MarketFinance

“It’s clear that the business environment has shifted and SMEs are looking ahead with a quietly confident and cautiously optimistic view,” comments MarketFinance’s CEO Anil Stocker. “UK businesses intend to ramp up growth through domestic and international expansion, digital transformation, and even merger and acquisition activity. But as they reset their post-pandemic goals for a post-pandemic, they’ll need to be confident of their funding base.

“Given that so many SMEs are looking outside of traditional routes in their search for finance, we’re particularly proud to have been accredited by the British Business Bank as one of the few alternative providers under The Recovery Loan Scheme.

“Schemes like the RLS are a golden opportunity for SMEs looking to gear up for growth, providing easily accessible funding at a lower cost across a wide range of products. We expect to see a large number of SMEs taking advantage of the scheme over the next 6 months as their growth and expansion efforts gain momentum and they invest in ambitious plans for 2022 and beyond.”

Author

  • Tyler is a Fintech Junior Journalist with specific interests in Online Banking and emerging AI technologies. He began his career writing with a plethora of national and international publications.

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