Nearly a third of UK SMEs have paused business areas due to financial constraints.
- Research commissioned by Manx Financial Group reveals significant financial difficulty among SMEs.
- Hiring, marketing, and expansion are the most affected business activities.
- Securing external finance remains a considerable challenge, with many adopting short-term loans.
- The necessity for innovative financial solutions is critical to mitigate economic risks.
Nearly a third of small and medium-sized enterprises (SMEs) in the United Kingdom have halted or paused certain business operations over recent years due to financial difficulties. This situation has been highlighted by new research initiated by Manx Financial Group PLC, pointing to a significant financing gap that impacts growth, particularly in uncertain economic times.
The study identifies hiring, marketing, launching new products, expanding into new markets, and research and development as the primary sectors SMEs have been forced to pause due to financial constraints. Although the percentage of SMEs pausing business activities has decreased from previous years, 10% of those seeking external finance failed to acquire it.
Sought-after financial options include short-term business loans and secured loans. However, many SMEs face barriers such as high costs (34%), lengthy processes (25%), and inflexible repayment terms (25%). A significant portion (21%) also reported a lack of understanding from lenders about their business operations.
Forecasts indicate SMEs anticipate growth in sales, market expansion, and product development over the next year. Expectations of stagnant growth have reduced, suggesting improved optimism among businesses. With appropriate external finance, they foresee potential growth of up to 29%, a notable increase from previous projections.
Douglas Grant, the Group CEO at Manx Financial Group PLC, underscores the economic impact of these financial challenges. He advocates for urgent government intervention, proposing a permanent loan scheme tailored to various sectors. Such initiatives would harness both traditional and non-traditional lending, potentially unlocking economic growth during challenging times.
Innovative financial solutions and government support are vital for the sustainable growth of UK SMEs amidst current economic uncertainties.
