Digital marketplace for business finance Funding Options, in partnership with Censuswide, has found that 81% of business owners are considering a return to employment, citing the cost of business energy, rising supplier costs and the cost of living as their top concerns. With SMEs totalling over 97% of British businesses and a key driver of both jobs and growth, this mental fatigue and drop in entrepreneurial confidence poses a major threat to the UK economy.

This new Funding Options data is proof that current market conditions, specifically the growing energy crisis, are taking their toll on small business owners following a turbulent few years. Since February 2021, FSB figures show there has been a 424% rise in gas costs and 349% increase in electricity bills for businesses. In response, new prime minister Liz Truss has now announced a £150bn package to support households and businesses, including an energy price cap fixed at £2,500 a year and a confirmed equivalent guarantee for businesses for the next six months. 

Government intervention was vital, but business owners need further support to negotiate the difficult months ahead. According to Funding Options data, only 42% of entrepreneurs suggested they are 'very confident' about surviving the next six months, with much of this seemingly contingent on securing either short or long term business loans. In fact, 88% suggest it is likely they will be looking for business funding in the near future. 

Funding Options is currently witnessing more businesses looking for longer-term loans, as it offers them the security to plan for the future rather than simply survive. However, due to confusion around the latest iteration of the Recovery Loan Scheme, the business finance marketplace has seen long term loan options decrease by two-thirds compared to six months ago. Furthermore the accreditation of the non-bank lender community has yet again been delayed, meaning less competitive choice for SMEs as a direct result. 

Simon Cureton, CEO of Funding Options, comments: “Currently, UK government figures state that SMEs contribute over 52% of the UK’s annual turnover, with the FSB putting that figure around £2.3 trillion. The rise in energy costs has only exacerbated the fears already held around the knock-on effects of Covid. Combined with the crisis in the Ukraine, costs are escalating across the board and SMEs are being left to fend for themselves. It is worrying to see that recent events have caused so many entrepreneurs to consider returning to employment rather than running their own businesses. It may be an unlikely scenario, with so many people in the UK passionate about the companies they have created, but shows that the appeal of independence may be ebbing away as we enter what could be a long economic winter. While we are pleased to see a support package from the Government, businesses require crucial finance options to plan beyond survival. 

“Small business owners are resilient by nature, but if even 10% were lost to the UK economy that would account for around £230 billion of lost turnover. This would mark a terrible blow to both the short and long term future of the UK’s economy, and should be a major concern for Liz Truss requiring further clarification on financial support beyond this latest package. Government intervention is required to provide the necessary financial support to SMEs when they need it most, not least around the new iteration of the Recovery Loan Scheme (RLS) which is stymying the ability of lenders to compete. Entrepreneurs desperately need to see a return to market-based lending to support them with a competitive array of funding options from the innovative non-bank finance sector.”

Nick Levine, Chartered Accountant and Fintech Specialist, comments: “Given the numerous challenges they currently face, it is unsurprising that small business owners are feeling overwhelmed and suffering from fatigue following a tumultuous couple of years. As we enter the winter months, we simply can’t leave entrepreneurs out in the cold to grapple with these perilous market conditions. They need support beyond the next six months so they can plan for the future rather than for survival. Several business owners have expressed their justified fears around both the energy crisis and rising inflation to me, and their desperation continues to grow with the lack of options at their disposal. Although it is positive to see the Government stepping in, we need to see bolder action to empower the fintech and lending communities to support small businesses by offering more competitive solutions.”

To keep up with the ever-changing borrowing requirements of SMEs and help facilitate vital funding, Funding Options recently launched Funding Cloud: Insights to bring unparalleled data to SME lenders with a breadth of market insight capable of driving new product innovation. The intuitive and user-friendly platform provides near real-time knowledge and intelligence that has scarcely been available before in a highly fragmented and competitive marketplace. Through Funding Cloud(™), the first fully integrated and real-time lending platform, loan application to credit approval has taken just 20 seconds, with the record for application to funds in an SME’s bank account just 18 minutes.