An appetite for funding

The sweet ingredients SMEs are looking for to enable business growth.

About the research

This analysis is based on bespoke market research commissioned by Barclays and conducted by Censuswide among more than 800 directors in SMEs. The sample covered UK companies with a turnover of £6m-£50m and the research was conducted in June 2022.

Key takeaways

Finance for business growth is a priority for most SME leaders
Business confidence in terms of earnings remains high
There is a strong appetite for funding among younger SME directors
Many SME owners anticipate a need for funding to drive their growth in export sales.

Planning for expansion

95% of SME directors will be looking for finance for their business growth plans in the next 12-18 months.

93% of SME owners expected a requirement for funding to drive their growth in export sales in the next 12-18 months.

A significant 95% of SME directors will be looking for finance to fuel their business growth plans in the next 12-18 months.

On one hand, this could suggest optimism about the future, or on the other hand, that SME owners are looking for finance options to help them get through challenges ahead.

In bigger SMEs (with a company turnover of £40m-£50m), the percentage of SME directors looking for finance rises to 98%.

There is also a strong appetite for funding among younger SME directors – those in the 25-34 year olds age group. Among this group, 99% cited it as a priority in the next 12 to 18 months. This perhaps signals confidence among younger SME owners, and slightly less appetite for risk among older SME owners.

Staying confident

Many SME owners also anticipate a requirement for funding to drive their growth in export sales in the next 12-18 months. Some 93% of SME owners said they expected a requirement for this. Again, those in the 25-34 year old age group were even more likely to say yes to this. For this group, the percentage rose to 96%.

Business confidence in terms of earnings remains high.

When predicting how earnings during business tax year 2022-23 compare to the previous year, more than two thirds of SME directors (67%) predicted they would make more than previous year.

Some 28% predicted they would make the same as 2022-23 tax year, with only 2% saying they thought they would make less than that year (the remainder said they were not sure yet).

Looking at regional variation, SME owners in Northern Ireland, Wales and the Midlands were most likely to anticipate that their SME would make more than the previous tax year, with 81%, 78% and 77% respectively saying this.

SMEs in London were more likely than in other regions to predict that they will make less in the 2022-23 business tax year than the previous year, with 8% in that region saying this.

Identifying areas for growth

Looking at future growth, SME owners identified where they see a need for new solutions or products to help that growth. The most popular area identified was international trade (chosen by 59% of SME owners). This was followed by cash management (52%) and funding (42%).

Barclays provide a range of funding options for SMEs of all sizes.

Whether it’s working capital to help manage cashflow, our innovative payment solutions or assistance with trade and managing risks efficiently.

Talk to us about how we can support your business growth plans. Our expert advisers can help you decide which funding option is right for you.

Strategies for success

Our research has found that the vast majority of SMEs are looking for finance – suggesting they are optimistic about the future or looking for finance options to help them take their next steps. In fact, some 95% of SMEs we surveyed said they will be looking for finance for their business growth plans in the next 12 -18 months.

So, what funding is available to you and how can you go about achieving it?

Choose the right funding

There are many different types of funding available to small businesses. Research your options and think about what would best meet your SME needs. Funding can be via grants, debt financing, loans, or investment. A great way to decide what will work best for you is to talk to a Barclays Relationship Director.

Understand the risks and the cost

Achieving funding can be exciting – and open doors to expansion and growth. But it’s important to look past the money coming your way and to understand the commitment you will need to make to repay or service that funding. Be realistic and assess the risks involved – both for your SME and yourself. Looking at both opportunities and threats will help you prepare for different eventualities.

Be attractive to lenders

As with any level of borrowing, the lender will want confidence that you are a well-run SME and able to pay them back. So make sure you have your house in order as an SME. Steps you can take include obtaining a credit report, peparing a well-written business plan, and giving details showing the projected stability of the SME. Give details of your current customer base, your marketing and sales plans, your staffing needs, and operational costs. Also talk about your competitors. If your projections are to make a loss in your first year, for example, then state this clearly.

It’s good to talk

Obtaining finance can be complex – but it shouldn’t just be a case of applying and hoping. As with so many areas of life, great communication goes a long way. Talk to your funding provider to understand the process, understand what they need from you, and make sure you are clear on what happens at each stage, including repayment if applicable. Start the conversation as early as you can and involve your funding provider in your business development plans.

Talk to your bank

It’s unlikely any lenders will know your SME better than your business bank and your Relationship Director (RD). So take the opportunity to talk to them about your business plans and your funding needs. Your RD is well placed to advise you as they already understand the direction and growth trajectory of your SME. They have a wealth of experience to share and will be used to dealing with similar business requests. Speaking to them now might just help you get to where you want to be in a quicker and safer way.

Find out how SMEs are tackling three key issues