Skip to main content
We're here with practical information for your business. Learn about business planning, running a business and more.

Search

For a successful business, you need a viable business idea, the skills to make it work and the funding. Discover whether your idea has what it takes.

Forming your business correctly is essential to ensure you are protected and you comply with the rules. Learn how to set up your business.

Advice on protecting your wellbeing, self-confidence and mental health from the pressures of starting and running a business.

Learn why business planning is an essential exercise if your business is to start and grow successfully, attract funding or target new markets.

It is likely you will need funding to start your business unless you have your own money. Discover some of the main sources of start up funding.

Businesses and individuals must account for and pay various taxes. Understand your tax obligations and how to file, account and pay any taxes you owe.

Businesses are required to comply with a wide range of business laws. We introduce the main rules and regulations you must comply with.

Marketing matters. It drives sales and helps promote your brand and products. Discover how to market your business and reach your target customers.

Some businesses need a high street location whilst others can be run from home. Understand the key factors from cost to location, size to security.

Your employees can your biggest asset. They can also be your biggest challenge. We explain how to recruitment and manage staff successfully.

It is likely your business could not function without some form of IT. Learn how to specify, buy, maintain and secure your business IT.

Few businesses manage the leap from start up to high-growth business. Learn what it takes to scale up and take your business to the next level.

Lending to small firms hits all-time low

17 May 2022

Applications for small business loans are down and approvals are also at a record low according to the findings of a new poll of SMEs by the Federation of Small Businesses.

The latest quarterly Small Business Index published by the Federation of Small Businesses (FSB) shows successful finance applications plummeting to the lowest level on record. The FSB is warning that banks "pulling up the drawbridge" to small firms will further stifle economic growth.

The latest Bank of England figures from March 2022 also show that the annual growth rate of lending to SMEs is at a record low, despite small firms making net debt repayments of close to £1bn in March alone. Lending to big corporates, by contrast, has increased significantly since the start of the year.

The FSB poll of 1,200 small business leaders has revealed significant problems with late payment and supply chain issues. The challenges are so serious that 11% of small firms plan to close, sell or downsize their business over the coming year, equating to more than half a million businesses.

The key findings show that:

  • Only 9% of small firms applied for finance in Q1 2022, the lowest proportion since SBI records began;
  • 43% saw their applications approved - also a record low;
  • Just 19% described the availability of credit as "good" - the lowest point since 2016.

Of the firms that did secure finance, four in ten (42%) plan to use credit to manage cashflow, considerably more than the numbers planning to use funds for equipment (21%), expansion (19%) or recruitment (4%).

It seems that cashflow issues are being fuelled by late payment, with 61% of small firms saying they were impacted by late payment of invoices over the first quarter of this year and 26% saying the propensity for late payment is growing.

Of those that applied for finance, 61% sought traditional overdraft and/or loan products. A quarter (25%) applied for asset-based finance, such as invoice finance, with smaller numbers seeking funds through peer-to-peer platforms (7%) or crowdfunding (5%).

"Lenders pulling up the drawbridge for small firms will threaten our already faltering economic recovery," said FSB national chair Martin McTague. "A big chunk of what little finance is being accessed is being used to manage cashflow challenges as our late payment crisis worsens, rather than for much-needed investment and innovation. The government should accelerate delivery of our proposal to make Audit Committees directly responsible for supply chain practice to address this worrying trend.

"Culture change is what's needed here - lenders taking an objective approach to small business finance and big corporates putting best supply chain practice at the heart of environmental, social and governance programmes. The result would be win-win: strength in corporate supply chains and a thriving small business community driving economic growth from the ground up."

Written by Rachel Miller.

Stay up-to-date with business advice and news

Sign up to this lively and colourful newsletter for new and more established small businesses.