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Financing of small and medium enterprises in the UK - statistics & facts

Small and medium-sized enterprises (SMEs) in the United Kingdom (UK) are firms that employ less than 250 employees, have a turnover of no more than 25 million British pounds and/or gross assets not exceeding 12.5 million British pounds. With a considerable share of businesses in the UK falling within this category, it is safe to argue that SMEs play a substantial role in the UK economy. Businesses need to grow for various reasons: to satisfy increase in demand, expand a product line, or strengthen their competitive positions. Very often businesses rely on external financing to operate and grow. At least one quarter of SMEs have growth plans in any given year.

Which sources of external finance do UK SMEs opt for?

The most common types of finance are loans from banks, building societies, bank overdrafts, leasing or hire, credit card, and government or local authority grant schemes. However, external finance applications do not always get approved. About one in five SMEs reports that all their applications were rejected. In these situations, businesses could approach alternative forms of finance such as peer-to-peer loans, crowdfunding, equity finance, or factoring/invoice discounting. Not to be underestimated are loans from family and friends, which, while often not high in value, might turn out to be lifesaving to a small business.

What impact do SMEs have on the business lending sector?

SME's constitute a significant part of the customer base for the business lending sector in the UK. In the UK, SME lending constitutes more than one third of business loans. In any given month, SMEs receive more than four billion British pounds from monetary financial institutions, which includes banks and building societies.

Interesting statistics

In the following 4 chapters, you will quickly find the 31 most important statistics relating to "Financing of SMEs in the UK ".

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