Difficulties in getting hold of finance is one of the things holding the UK’s small businesses back. This concern has been highlighted by the Federation of Small Businesses (FSB), whose Q4 2021 Small Business Index also highlights increasing costs and skilled staff shortages as factors hampering growth this year.
The study of 1,200 small businesses found 54% plan to grow in 2022, which is a higher figure than that seen in the same quarter two years earlier, before the pandemic. On the other hand, business confidence was lower in Q4 than it had been throughout the previous year, at a net negative value of -8.5.
Although a high proportion (22%) of businesses said labour costs were an impediment, and 78% flagged concerns over operating costs, a further 11% of businesses surveyed said getting hold of finance was a dampener on their growth plans.
In the final quarter of 2021, fewer than half (45%) had loan applications approved, the lowest proportion since 2014. Lenders offered rates of 4% or more to 52% of the businesses, while 11%+ was offered to more than one in 10 (13%).
The report notes: “The credit availability and affordability indices worsened to levels not seen since Q1 2020, with readings of -10.8 and -11.4, respectively. Affordability is likely to worsen further in Q1, following the Bank of England’s December rate hike.”
Now the FSB is calling on the Government to introduce more business-friendly policies to help spur post-pandemic recovery ambitions for entrepreneurs. It urges banks and financial lenders not to “pull up the drawbridge” as it says they did in the wake of the financial crash more than a decade ago.
Funding the “employers and innovators of tomorrow”
FSB National Chairman Mike Cherry said: “After two years of turmoil, in which firms have once again shown their adaptability and resilience, the small business community stands ready to spur our economic recovery.
“Their optimism is, however, hampered by spiralling inflation, labour shortages and looming tax grabs. Come April, they’ll be faced with a jobs tax hike, an increase in dividend taxation and fresh business rates bills.
“The bounce back loan initiative was a real success, but it can’t be thought of as job done. New enterprises are launched every day across the UK, never more so than at times like this when the economy is changing apace. Our start-ups need funding to go on and be the employers and innovators of tomorrow.
“After the financial crash we saw banks pull up the drawbridge for small businesses. With emergency loan initiatives and the New Enterprise Allowance at an end, it’s vital that this trend doesn’t take hold once again.”
How to choose the best business loan for you
There are several options for businesses in search of funding. A non-secured business loan operates by looking at the creditworthiness of the business and its ability to pay the loan back. Businesses looking for a secured loan could put up their commercial property or other assets against the value of their loan.
If funds are needed quickly and for a short time, a bridging loan is worth looking at. A commercial mortgage is more suitable when finance is needed for a longer time. The interest rates for this business lending may vary depending on the sector you operate in, the credit history of your business and the assets you have available to secure your finance.
To organise a business loan, you may wish to speak to our preferred business loans broker, Watts Commercial Finance on 03300 417275. Compare business loans by checking out our chart.