OCDE - Financing SMEs and Entrepreneurs 2026 - Reino Unido de 2026

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FINANCING SMES AND ENTREPRENEURS 2026: UNITED KINGDOM © OECD 2026

Key facts on SME financing The developments in the SME finance markets in the Un ited Kingdom in 2024 reflected the high level of uncertainty both domestically and abroad. Political uncertainty in the United Kingdom increased in the leadup to the General Election in July. Similarly, political uncertainty in the United States rose ahead of the Presidential Election in November. Furthermore, the e volving conflicts in the Middle East and aggression against Ukraine resulted in uncertainty about the economic outlook. Gross flows of bank lending (excluding overdrafts), the main component of SME finance markets, rose by 5% in 2024 to GBP 62.1 billion in nominal terms. Thi s was the third highest since records began in 2012 after 2020, which had largely been driven by governme nt-guaranteed Covid-19 loans, and 2022. The rise in 2024 was largely due to increased lending by challeng er and specialist banks. However, gross repayments exceeded gross lending for the fourth consecut ive year, leading net lending to be negative. This is despite a fall in gross repayments of 5% to GBP 65.1 billion, the second consecutive fall from the record high in 2022. Nevertheless, the negative net len ding of GBP 3 billion was narrower than in 2023 (GBP 9.3 billion). The outstanding stock of bank lendin g continued to fall in 2024 but remained relatively high at GBP 179.3 billion. The outstanding stock of SM Es loans decreased from GBP 184 billion in 2023 to GBP 179 billion in 2024, while new SME lending r ose from GBP 59 billion to GBP 62.1 billion over the same time period. Among the commonly used forms of alternative finance, t he use of asset finance, invoice finance and asset-based lending rose in 2024. In contrast, that of overdrafts and equity finance fell. Asset finance new

same time period. Among the commonly used forms of alternative finance, t he use of asset finance, invoice finance and asset-based lending rose in 2024. In contrast, that of overdrafts and equity finance fell. Asset finance new business rose by 0.9% to GBP 23.5 billion, a new reco rd high. This was largely driven by increased new business in the business car finance, and commercial vehicle finance, sectors. Similarly, the use of invoice finance and asset-based lending rose by 5% to GBP 11 billion. However, the value of overdrafts was down s that smaller businesses found it harder to secure new, or increase existing, overdrafts than use other types of working capital finance. Like overdrafts, the value of SME equity finance decline d by 2.5% to GBP 10.8 billion, and the number of announced deals was down by 15.1% to 2048. Following u nsustainable increases in valuations during 2021, higher inflation and a tighter monetary environ ment triggered a downturn in 2022, leading equity investment to revert to lower levels seen prior to the Covid-19 pandemic. The value of alternative finance lending from providers including marketplace, non-bank balance sheet and platform lenders is likely to have risen in 2024. Around GBP 3.3 billion of SME business lending via such providers has been reported. This is up from around GBP 2.5 billion by those provide rs that the British Business Bank has data for in

2023. The full year results for 2024 of some providers are yet to be published.

The United Kingdom government, the Department for Bu siness and Trade and the British Business Bank will continue to work with a wide range of partners t o support businesses across the United Kingdom as they look to invest and grow. United KingdomOutstanding business loans, SMEs GBP billion 189 176 166 167 164 166 165 166 168 213 209 197 184 179

will continue to work with a wide range of partners t o support businesses across the United Kingdom as they look to invest and grow. United KingdomOutstanding business loans, SMEs GBP billion 189 176 166 167 164 166 165 166 168 213 209 197 184 179 Outstanding business loans, total GBP billion 504 472 448 435 430 449 466 477 490 530 526 540 528 539 Share of SME outstanding loans % of total outstanding business loans 37.5 37.3 37.1 38.4 38.3 36.9 35.5 34.8 34.2 40.2 39.8 36.6 34.8 33.3 New business lending, total GBP billion 146 163 190 205 234 259 274 259 329 241 276 258 264 New business lending, SMEs GBP billion 38 43 53 58 59 57 58 57 105 58 65 59 62 Share of new SME lending % of total new lending 26.1 26.4 28.2 28.2 25.3 22.2 21.1 22.0 31.9 23.9 23.6 22.9 23.5 Government loan guarantees, SMEs GBP million 61 51 32 43 50 44 34 31 32 30 30 57 453 11 251 1 811 570 854 Government guaranteed loans, SMEs GBP million 626 528 324 284 335 297 226 207 216 199 203 61 024 13 279 2 465 814 1 219 Direct government loans, SMEs GBP million 0.8 61.5 69.8 61.3 82.1 106.6 85.8 88.6 128.3 134.7 121.5 123.3 131.9

2 465 814 1 219 Direct government loans, SMEs GBP million 0.8 61.5 69.8 61.3 82.1 106.6 85.8 88.6 128.3 134.7 121.5 123.3 131.9 Interest rate, SMEs % 4.54 3.47 3.49 3.52 3.71 3.60 3.43 3.33 3.22 3.16 3.44 3.41 2.15 2.45 3.91 7.01 7.42 Interest rate, large firms / PNFCs % 3.49 2.35 2.10 2.25 2.41 2.20 2.45 2.11 2.60 2.43 2.70 2.64 1.87 2.12 3.23 6.35 6.81 Interest rate spread Percentage points 1.05 1.12 1.39 1.27 1.30 1.40 0.98 1.22 0.62 0.73 0.74 0.77 0.28 0.33 0.68 0.66 0.61 Collateral, SMEs % of SMEs needing collateral to obtain bank lending 25 31 31 34 40 45 55 41 39 15 14 22 35 41 Percentage of SME loan applications SME loan applications/ total number of SMEs 7 6 4 5 4 3 2 2 2 6 7 3 2 3 Rejection rate 1- (SME loans authorised/ requested) 31 32 23 18 19 20 24 25 16 15 44 53 52

7 6 4 5 4 3 2 2 2 6 7 3 2 3 Rejection rate 1- (SME loans authorised/ requested) 31 32 23 18 19 20 24 25 16 15 44 53 52 Venture and growth capital GBP billion 1.8 1.9 2.1 3.1 4.5 4.2 7.6 7.4 8.7 11.9 20.6 17.4 11.1 10.8 Venture and growth capital (growth rate) %, Year-on -year growth rate 7 10 49 44 -5 80 -2 17 37 73 -16 -36 -2 Leasing and hire purchases GBP billion 12.0 12.8 13.5 14.8 16.3 17.0 19.3 19.8 20.6 16.0 19.6 21.8 23.3 23.5 Factoring and invoice discounting GBP billion 8.5 8.6 9.2 9.6 9.8 10.6 10.6 10.8 11.8 12.0 11.8 7.8 8.2 10.7 10.5 11.0 Bankruptcies, SMEs Thousands 25.1 21.4 22.2 21.4 18.9 17.6 15.9 16.1 15.7 17.3 18.5 13.4 14.9 23.4 26.6 25.4 Bankruptcies, SMEs (growth rate) %, Year-on-year grow th rate -14.7 3.7 -3.6 -11.7 -6.9 -9.7 1.3 -2.5 10.2 6.9 -27.6 11.2 57.0 13.7 -4.53

FINANCING SMES AND ENTREPRENEURS 2026: UNITED KINGDOM © OECD 2026

Macroeconomic conditions During another year of uncertainty in 2024, economic gr owth in the United Kingdom remained subdued but positive. 2024 posed significant challenges for the e conomy, with economic and political uncertainty, and a turbulent global economic environment. Following a brief technical recession in the second half of 2023, the economy showed signs of recovery, growing by 0.8% in the first quarter of 2024. However, growth across the rest of the year was relatively subdued , leaving annual real GDP for 2024 just 1.1% above 2023. This rate of growth was faster than in 20 23 (0.4%) but below the average annual growth of 1.5% between 2013 and 2023.1 Real GDP growth in the United Kingdom in 2024 was al so below a couple of Group of Seven (G7) peers, with the United States (2.8%) and Canada (1.5%) reporting stronger growth over the year. However, it was in line with France (1.1%). The latest available data for the first half of 2025 showed the economy generally remained subdued. Business investment grew in 2024 but only modestly, wit h the pace remaining below the pre 2008 global financial crisis trend. Across 2024 business investment was up 2% from 2023,however there was considerable volatility within the year. Business investment was broadly flat in the first quarter but grew in the following two quarters before contracting in the final quarter of the year.2 One explanation for the business investment growth ove r 2024 is the stabilisation of the Bank of England (BoE) Bank Rate in the early part of the year. This fol lowed Bank Rate rising from 0.10% in December 2021 to 5.25% in August 2023. The BoE subsequently star ted to reduce Bank Rate in August 2024, with

(BoE) Bank Rate in the early part of the year. This fol lowed Bank Rate rising from 0.10% in December 2021 to 5.25% in August 2023. The BoE subsequently star ted to reduce Bank Rate in August 2024, with a cut to 5% that month. This was followed by Bank Rat e being reduced to 4.75% in November. The BoE continued to gradually reduce Bank Rate during 2025. The introduction of full expensing, which allows comp anies to claim 100% of qualifying machinery and plant investments, may also have contributed to the busi ness investment growth in 2024. 3 4 The latest available data for the first half of 2025 showed bus iness investment was mixed, with strong growth in the first quarter followed by a contraction in the second. Business confidence remained weak in 2024. The Federati on of Small Businesses (FSB) small business confidence index rose in the first quarter of 2024 and was in positive territory for the first time in two years. However, the index subsequently fell for three consecutiv e quarters, leading confidence in the fourth quarter of 2024 to be the lowest since the Covid-19 p andemic. This followed the slow economic growth observed in the second half of the year. Additionally, the FSB suggested that expectations regarding increased business taxes and employment costs may have cont ributed to the pessimism observed in the fourth quarter of 2024.5 The British Chambers of Commerce (BCC) Quarterly Econo mic Survey showed a slightly more positive outlook in the first half of 2024, with an increase in the net balance of businesses expecting turnover to grow. However, like the FSB results, this optimism was followed by a significant decline in the second half of 2024, especially in the fourth quarter.6 Inflation eased markedly during 2024. The annual rate of headline inflation, as measured by the consumer price index (CPI), in September 2024 was 1.7%. This wa s down from 4% in December 2023 and well

of 2024, especially in the fourth quarter.6 Inflation eased markedly during 2024. The annual rate of headline inflation, as measured by the consumer price index (CPI), in September 2024 was 1.7%. This wa s down from 4% in December 2023 and well below the peak of 11.1% in October 2022. The easing was largely driven by the continued recovery of the global supply chain, which led to falls in the price s of key global commodities including natural gas. However, inflation picked up during the fourth quarte r of 2024, with the annual rate reaching 2.5% in December. This was mainly due to increased global uncertainty as well as crude oil and gas prices starting to rise again. The latest available data for the thi rd quarter of 2025 showed inflation continued to be relatively high.74

FINANCING SMES AND ENTREPRENEURS 2026: UNITED KINGDOM © OECD 2026

Both core and services inflation were a little highe r than the headline rate during 2024, suggesting persistent underlying domestic pressures. The annual rat e of core inflation, which excludes the volatile energy and food components of the CPI, was 3.2% in De cember 2024. The latest available data for the third quarter of 2025 showed core and services inflation were still comparatively elevated. Job vacancies fell during 2024, but real regular pay in creased. The number of vacancies continued to fall over the year, dropping to 812 000 in the three mont hs to December 2024. The latest available data for the third quarter of 2025 showed job vacancies continued to trend lower while the unemployment rate rose but remained relatively low. Annual wage growth ease d for most of 2024 but remained relatively strong. Real regular pay grew 2.6% in the three months to D ecember 2024. This was the strongest growth since the three months to September 2021 (3.1%). Both nomi nal and real regular annual pay growth picked up in the fourth quarter of 2024. SMEs in the national economy

the three months to September 2021 (3.1%). Both nomi nal and real regular annual pay growth picked up in the fourth quarter of 2024. SMEs in the national economy There were 5.5 million private sector businesses in the United Kingdom at the start of 2024, according to business population estimates from the Department for Business and Trade (DBT). This was down 1.0% from 2023. The main driver in absolute terms was a f all in the number of businesses with no employees, which declined by 38 320,which was equivalent to a fall of 0.9%. The number of businesses with no employees totalled 4.1 million, which comprises around 7 4.0% of businesses, 16.0% of employment and 6.9% of turnover in the private sector. The fall in the number of businesses without any emplo yees resulted from a decrease of 43 000 (1.5%) unregistered businesses, which was partially offset by an increase in non-employing registered businesses of 5 000 (0.4%). This followed an increase in the pre vious year, which was driven by a 3% rise in unregistered zero employee firms at the start of 2023 compared to the previous year. The number of private sector businesses with employees in 2024 was down 1.2% from 2023. The breakdown by business size showed the largest decrease was in the number of micro firms (-1.4%), which have between one and nine employees and account for 81 .4% of all employers in the private sector. The second largest decrease was among small firms (-1.3%). Small firms have between 10 and 49 employees and account for 15.4% of all private sector employers. Meanwhile, there was an increase in the number of private sector medium and large businesses in 2024. The breakdown by business size showed the largest increase was in the number of large firms (3.6%), wit h more than 250 employees. This was followed by medium-sized businesses (2.3%), which employ between 50 and 249 staff.5

private sector medium and large businesses in 2024. The breakdown by business size showed the largest increase was in the number of large firms (3.6%), wit h more than 250 employees. This was followed by medium-sized businesses (2.3%), which employ between 50 and 249 staff.5

FINANCING SMES AND ENTREPRENEURS 2026: UNITED KINGDOM © OECD 2026

Figure 1. Number and percentage annual increase in SME employers by size of firm (headcount) in the United Kingdom Number of firms, thousands 2024 (LHS), percentage change 2023-24 (RHS)

Source: DBT, Business Population Estimates 2024

The contribution made by those businesses with employee s to the stock of private sector firms, employment and turnover varies substantially by the size of the employer i.e. headcount. In 2024, micro firms comprised around 21.1% of all private sector busine sses. This compared to small businesses accounting for 4.0%, while medium-sized and large busi nesses comprised only 0.7% and 0.2%, respectively. However, in general, the ratio of employment and turnover per firm increases in line with the This compared with large businesses accounting for 40.0% of employment and 47.8% of turnover. Figure 2. Percentage share of firms, employment, and turnover amongst SME employers in the United Kingdom Percentage share of firms, employment and turnover 2024

Source: DBT, Business Population Estimates 20246

FINANCING SMES AND ENTREPRENEURS 2026: UNITED KINGDOM © OECD 2026

SME lending Gross bank lending increased moderately in 2024. BoE data showed nominal gross bank lending excluding overdrafts to SMEs in 2024 totalled GBP 62.1 billion . This was a nominal increase of 5% from 2023. The nominal value of gross lending was the third highest since records began in 2012 after 2020 (GBP 105

overdrafts to SMEs in 2024 totalled GBP 62.1 billion . This was a nominal increase of 5% from 2023. The nominal value of gross lending was the third highest since records began in 2012 after 2020 (GBP 105 billion), which had largely been driven by government-g uaranteed Covid-19 loans, and 2022 (GBP 65.1 billion).8 While gross lending rose 5% in nominal terms, when accounting for inflation it was up only 2%. The value of gross lending in real terms was GBP 60.4 billion, which was the fourth lowest on record. Governmentguaranteed lending drawn down from banks in 2024 totalled GBP 0.6 billion. Of this, 74% was term loans. The GBP 0.6 billion was the equivalent of 1% of tota l gross bank lending for the year. The governmentguaranteed lending comprised drawdowns under the thi rd variant of the Recovery Loan Scheme (RLS 3) in the first half of 2024 and the Growth Guarantee Scheme (GGS) in the latter half.9 10 The GBP 0.6 billion of government-guaranteed lendin g drawn down from banks in 2024 was the highest since 2022 (GBP 1.4 billion). However, it remained well below the figure in 2020 (GBP 56.7 billion), which comprised drawdowns under the Coronavirus Business Inte rruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS). The quarterly breakdown showed that during 2024 nomin al gross lending increased in the second and fourth quarters but was broadly flat in the first and third quarters of the year. The pickup in the fourth quarter (12%) was the largest in just over two years. This led gross lending to reach GBP 17.2 billion, the highest quarter since the third quarter of 2022 (also GBP 17.2 billion). The annual breakdown by sector shows nominal gross lend ing to SMEs in the real estate (RE) sector in

(12%) was the largest in just over two years. This led gross lending to reach GBP 17.2 billion, the highest quarter since the third quarter of 2022 (also GBP 17.2 billion). The annual breakdown by sector shows nominal gross lend ing to SMEs in the real estate (RE) sector in 2024 was GBP 18 billion. 11 This was up 19% from 2023 and the highest since reco rds for RE lending began in 2016. While nominal gross lending to the RE sector increased sharply in 2024, it was broadly flat to all other sectors in aggregate. Consequently, RE lending as a sh are of total gross lending reached 29%. This was up from 26% in both 2022 and 2023 and the highes intelligence is that the recent increase in lending to the RE sector has been driven by actual and expected falls in the Bank Rate. This reflects that the demand from businesses in the RE sector for lending is typically more sensitive to changes in Bank Rate than that from others. As RE projects are often heavily reliant on debt financing, higher interest rates increase the cost of servicing the debt and erode profit margins, and vice versa. The latest available data for the first hal f of 2025 showed gross bank lending to SMEs was broadly flat.7

FINANCING SMES AND ENTREPRENEURS 2026: UNITED KINGDOM © OECD 2026

Figure 3. Gross lending flows to SMEs and large businesses, and percentage SME share, in the United Kingdom Quarterly flow of gross lending GBP billion (LHS), percentage SME share of total lending (RHS)

Source: Bank of England Bankstats, 2025

Gross repayments fell in 2024 for the second consecutive y ear. BoE data showed nominal gross repayments by SMEs in 2024 totalled GBP 65.1 billion. T his was down 5% from 2023 and the second consecutive fall. In nominal terms this was still the fou rth highest on record after 2022 (GBP 73.5 billion) ,

repayments by SMEs in 2024 totalled GBP 65.1 billion. T his was down 5% from 2023 and the second consecutive fall. In nominal terms this was still the fou rth highest on record after 2022 (GBP 73.5 billion) , 2023 (GBP 68.5 billion) and 2021 (GBP 65.7 billion). However, in real terms, gross repayments were down 8% from 2023 and the value of gross repayments (GBP 63.3 billion) was the second lowest on record after the joint low in 2013 and 2014 (both GBP 59.3 billion). The fall in nominal gross repayments for the second co nsecutive year largely reflects that the one-year holiday on paying interest and repaying the principal on BBLS ended in late 2022. As a result, by the end of 2022 all those smaller businesses that had drawn down BBLS had started paying interest and repaying the principal or paid the facilities back in full. The Department for Business and Trade data as of 31 December 2024 also showed the majority (70%) of BBLS fa cilities drawn down from lenders including banks were either fully repaid (15%) or on schedule (55 %).12 The latest available data for the first half of 2025 showed gross repayments continued to trend lower. The BoE measure of nominal net lending in 2024 was a negative GBP 3 billion. This was the fourth consecutive year of negative net lending but the narrowe st over that period. It was also much narrower than the negative net lending in 2023 (GBP 9.3 billi on), the largest on record. In real terms, net lending in 2024 was a negative GBP 2.9 billion. The latest available data for the first half of 2025 showed net lending had turned positive.8

FINANCING SMES AND ENTREPRENEURS 2026: UNITED KINGDOM © OECD 2026

Figure 4. Gross lending, gross repayments, and net lending to SMEs in the United Kingdom

had turned positive.8

FINANCING SMES AND ENTREPRENEURS 2026: UNITED KINGDOM © OECD 2026

Figure 4. Gross lending, gross repayments, and net lending to SMEs in the United Kingdom Quarterly gross lending and repayments GBP billion (LHS), quarterly net lending GBP million (RHS)

Source: Bank of England Bankstats, 2025

The outstanding stock of bank lending to SMEs continued to fall during 2024 but remained relatively high. BoE data showed the outstanding stock of bank lending in the fourth quarter of 2024 was GBP 179.3 billion. This was down 3% from the same quarter in 2023. It was also below that in corresponding quarters of 2020, 2021 and 2022. However, it remained above that in the fourth quarter of every year from 2012 to

2019. The fall in 2024 is in line with the BoE agent s, based on discussions with at least 700 firms across the United Kingdom, reporting during the year their contacts were generally deleveraging and keen to reduce debt.13 14The latest available data for the first half of 2025 showed the outstanding stock of bank lending to SMEs continued to fall in the first quarte r of the year before rising sharply in the second. The BoE attributed the rise in the second quarter to an update in the reporting population.9

FINANCING SMES AND ENTREPRENEURS 2026: UNITED KINGDOM © OECD 2026

Figure 5. Stock of lending to SMEs and large businesses, and percentage SME share, in the United Kingdom Quarterly stock of lending, GBP billion (LHS), percentage SME share of total lending (RHS)

Source: Bank of England Bankstats, 2025

The value of deposits held by SMEs with major banks c ontinued to fall in 2024 but remained relatively high. UK Finance data for the seven largest banks in the United Kingdom showed the total average value of deposits in 2024 was GBP 224 billion.15 This was down 8% from 2023, the third consecutive annual fall.

high. UK Finance data for the seven largest banks in the United Kingdom showed the total average value of deposits in 2024 was GBP 224 billion.15 This was down 8% from 2023, the third consecutive annual fall. However, the value was the fifth highest since records b egan in 2012 and remained above that in every year from 2012 to 2019. The fall in the value of dep osits in 2024 is consistent with the B reporting during the year that their contacts were generally using their own cash to fund investment rather than borrowing. The latest available data for the fir st half of 2025 showed the value of deposits continued to fall. Similarly, the value of overdrafts used by SMEs fell in 2024. UK Finance data for the seven largest United Kingdom banks showed the total average value of overdr afts used by SMEs in 2024 was GBP 6 billion. This was down 2% from the previous year and the second l owest on record after 2021 (GBP 5.9 billion). increase existing, overdrafts than to use other types o f working capital finance such as credit cards. The latest available data for the first half of 2025 showed the value of overdrafts trended lower.10

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Figure 6. Business deposits held, and business overdrafts used, by SMEs in the United Kingdom Business deposits, GBP billion (LHS), business overdrafts, GBP billion (RHS)

Source: UK Finance, 2024

Demand-side surveys show that, in overall terms, the use of external finance by SMEs fell in 2024. The UK Finance BVA BDRC SME Finance Monitor showed in 2024 an annual average of 39% of SMEs reported they were currently using external finance. This was two percentage points below 2023 (41%) and the lowest since 2022 (36%). The fall was largely driven by declines in the use of core products i.e.,

reported they were currently using external finance. This was two percentage points below 2023 (41%) and the lowest since 2022 (36%). The fall was largely driven by declines in the use of core products i.e., bank overdrafts, credit cards and bank loans/ commercial mortgages. In contrast, the use of loans or equity from directors/ family/ friends was marginally higher while that of leasing/ hire purchase/ vehicle finance was steady. The latest available data for the first ha lf of 2025 showed the use of external finance was slightly higher at 42%.16 Table 2. Percentage of SMEs using core bank facilities and other finance in the United Kingdom All data as at year end, Q1-Q4, demand side survey, percentage of all SMEs Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 202 4 Core products (any) 36 32 29 30 30 31 32 39 29 31 26 31 28 - Bank overdraft 22 18 16 16 16 18 19 23 13 11 10 13 11 - Credit cards 18 18 15 16 17 16 14 18 13 11 11 17 15 - Bank loan/ commercial mortgage 10 8 7 7 7 6 9 9 12 17 13 12 10 Other forms of finance (any) 18 18 17 17 16 18 12 16 18 24 20 21 20 - Leasing/ hire purchase/vehicle finance 6 8 7 7 7 9 7 11 9 9 8 10 10 - Loans/ equity/ directors/ family/ friends (1) 6 9 8 8 6 5 4 4 4 5 6 8 9 - Invoice finance 3 2 3 2 3 3 1 1 1 1 1 1 1

• Loans/ equity/ directors/ family/ friends (1) 6 9 8 8 6 5 4 4 4 5 6 8 9 - Invoice finance 3 2 3 2 3 3 1 1 1 1 1 1 1 - Grants 1 1 2 2 2 2 1 1 8 14 9 4 2

Any (external) finance 44 41 37 37 37 38 36 45 37 43 36 41 39

Note: (1) The wording for these forms of finance changed substantially over time, estimates are for combined options.

Source: UK Finance BVA BDRC, SME Finance Monitor, Q4 Reports 2012-2023 for historic data and Q4 2024 Report, p. 14011

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The share of SMEs applying for bank facilities rose marg inally in 2024. This followed a sharp decline in 2022 and marginal fall in 2023. The proportion that applied for new, or to renew existing, bank loans or overdrafts rose to 3% from 2% in 2023. This is the hi ghest since 2022 (also 3%) and substantially below the level observed when records began in 2011 (12%). The rise was driven by the proportion that applied for a new facility increasing to 3%, which was also th e highest since 2022. This followed the proportion rising sharply in 2020 to 6% and climbing in 2021 to 7%, the joint highest on record (with 2011), because some of the SMEs that used the Covid-19 government loa n schemes were borrowing for the first time. Following this, there was a sharp decline in 2022 and a marginal fall in 2023. Table 3. Percentage of SMEs applying for loans or overdrafts (1) in the United Kingdom Percentages, all data as at year end, Q1-Q4, demand side survey

Following this, there was a sharp decline in 2022 and a marginal fall in 2023. Table 3. Percentage of SMEs applying for loans or overdrafts (1) in the United Kingdom Percentages, all data as at year end, Q1-Q4, demand side survey Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2 021 2022 2023 2024 % applied for new facility 7 6 4 5 4 3 2 2 1 6 7 3 2 3 % renewe d facility 7 5 4 4 4 3 2 1 0 0 0 0 0 0 % applied new facility/ renewal 12 11 8 8 8 5 4 3 2 6 7 3 2 3

Note: (1) Applications for any new/renewed facility (loan/ overdraft) in previous 12 months, estimated annual averag e in each year, Q1-Q4.

Applications for new and renewed facilities are not necessarily mutually exclusive (i.e., SMEs can apply for a new and renewed facility in same year), but slight variations are probably due to rounding issues. Questionnaire changes over the 2018 period may cause slight variation in the applications data.

Source: UK Finance BVA BDRC, SME Finance Monitor, Q4 Reports 2012-2017 for historic data, British Business Bank calculations for 20182022, and BVA BDRC analysis for 2023 and 2024.

The percentage of SMEs that reported they were happy to use finance to help grow their business rose in the second half of 2024 to 41% from the first half of that year (36%). This was the highest since the second half of 2016 (43%) and only slightly below when recor ds began in the first half of 2015 (45%). Similarly,

the second half of 2024 to 41% from the first half of that year (36%). This was the highest since the second half of 2016 (43%) and only slightly below when recor ds began in the first half of 2015 (45%). Similarly, the percentage of SMEs stating they would rather accept a slower rate of growth than borrow rose marginally in the second half of 2024 to 79% from the first half of the year (78%). At the time of writing the latest data on the percentage of SMEs reporting grow th plans based on what they can afford to self-fund was for the first half of 2024. This showed the percentage fell slightly to 85% from the second half of 2023 (87%) but remained higher than when records for that measure began in the first half of 2016 (80%). Table 4. SME attitudes to finance in the United Kingdom Data as at end of each half year, Q1-Q2 and Q3-Q4, demand side survey, percentage of all SMEs. Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2 024 % of SMEs that report H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 Happy to use finance to help business grow 45 45 43 43 33 34 33 32 29 29 30 35 37 36 30 32 32 33 36 4112

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