Why some businesses will get funding – and others will fall behind
As we emerge from years of ultra-low interest rates, 68% of business leaders report facing difficulties in accessing funding, according to our Business Outlook Tracker.
The silver lining? While higher borrowing costs may be the reality for businesses refinancing with their current lender, capital remains abundant for those who know where to find it – and how to position themselves to unlock it.
To stand out, businesses need to do more than highlight past successes. They need to demonstrate that they are resilient, innovative, and have a clear vision for the future of their business.
In this article, Head of Debt Advisory George Fieldhouse shares six factors that will impact businesses' ability to access funding now and in the long-term, supported by insights from our recent Beyond Now panel event.
68% of UK Businesses think that a lack of available funding to invest is negatively impacting their ability to boost productivity
68% of UK businesses are finding it hard to access new sources of funding
70% of UK businesses will likely need to apply for funding in 2025
Source: Grant Thornton Business Outlook Tracker, 800 senior decision makers surveyed in businesses with revenue from £50million - £1billion+
After the volatility of recent years, investors and lenders want to work with high-calibre leadership teams that have a track record of driving sustainable growth while navigating external challenges.
Building credibility begins before the pitch. Establishing strong, ongoing relationships with lenders and regularly sharing key successes and strategic initiatives helps to foster trust. This allows your contacts to advocate for your business internally, address concerns, and support you to access favourable terms when funding is needed.
As Nick Holder, Investor at the Business Growth Fund, noted in our recent Beyond Now event, “Investing at an institutional level is a collective decision, but at an individual level, it’s relatively personal.”
Not just a one-person show
Regardless of how strong your business strategy is, investors and lenders will need confidence that you have the right expertise and experience to execute it.
So while the CEO typically plays a leading role in pitching for funding, they may not be the best person to speak to every aspect of the business. For example, your IT Director may be better placed to take the lead on articulating the value of your digital strategy.
While economic pressures have de-prioritised sustainability progress for many businesses, it remains firmly on the agenda for investors and lenders.
They will increasingly look for firms to commit to ESG targets, with sustainable finance playing a key role in incentivising a positive ESG impact. Access to capital - and the cost of it - is likely to become increasingly dependent on this.
This shift is evident in the targets set by major banks. NatWest aims to cut the climate impact of its funding in half by 2030, while HSBC has pledged at least $750 billion in sustainable finance and investment by the same year. They, along with most other major banks, have also committed to achieving Net Zero by 2050 in alignment with the Paris Agreement.
As institutions work towards these goals, businesses can expect greater scrutiny around their plans to separate genuine sustainability efforts from greenwashing. While every detail doesn’t need to be set in stone, being able to articulate a genuine, sustained commitment is key.
Wherever you are on your digital journey, you need to be able to articulate how you plan to use technology to support your core business objectives – whether it’s scaling operations, improving decision-making or enhancing customer experience.
It is not about using buzzwords or proving you have the latest technology; it's about showcasing your ability to adapt, innovate and strategically align digital solutions with the specific needs of your business.
With the benefits of technology also comes the introduction of new risks, both internal and external. Some 90% of businesses have experienced a data breach or cyber-attack in the last three years, mostly at a financial cost. Lenders and investors are aware of these risks and how they could impact debt serviceability or returns. They will be looking for evidence that you have identified these and have a robust risk management framework in place to mitigate them.
As technology becomes increasingly embedded in businesses, these factors will play a growing role in assessing creditworthiness and investment potential.
Catch up on our latest BeyondNow panel session to hear from leading investors, lenders and economists on:
To stand out in a competitive market, your funding proposal will need to be clear, persuasive, and backed by robust data.
A strong, competitive pitch or information pack should include:
Present a balanced plan
Put yourself in the investor's shoes and think about the information you’d need to make a well-informed decision.
A compelling proposal should not gloss over challenges. Instead, it should clearly identify key risks, outline their potential impact on the business, and demonstrate the proactive steps being taken to mitigate them. This will instil more confidence than presenting a rose-tinted view of your business.
There are more funding options available than ever before – with challengers banks and private debt funds being an increasingly attractive option for many businesses.
We expect to see this trend continue to grow in coming years, driven by technological advancements and increasing demand from businesses for flexible financing.
Challenger banks
Challenger banks like Shawbrook Bank, Revolut and Tide are shaking up the SME finance market, often offering innovative finance options. These typically come with the benefit of streamlined digital processes, faster approvals, and more flexible terms than high street banks.
In 2023, the share of total gross lending to SMEs by challenger and specialist banks was 59% - the highest proportion on record, according to data from the British Business Bank.
Private Debt Funds
Many Private Debt Funds have similar fund structures to Private Equity, and raise funds directly from private investors and asset managers.
They have a variety of target returns and structures available and can offer close equivalents to bank structured finance transactions. They also offer higher levered options, typically with additional benefits in flexible terms, but at a higher price than the bank structures.
Data provider Preqin forecasted that private debt assets under management globally could almost double from 2022 levels to reach $2.8tn by 2028.
These models, along with others not covered such as venture debt and asset-based financing, offer greater flexibility in both terms and risk appetite, though they often come with higher interest rates.
In December 2024, Sir Keir Starmer reaffirmed his pledge to achieve the highest sustained growth among G7 countries by the next election.
To support this, the Government introduced a host of new initiatives, including Invest 2035 and the creation of the National Wealth Fund. The specifics of how these will operate remain uncertain, but the Government's upcoming spending review and 10-year infrastructure strategy, both due in June 2025, should clarify plans and how private investment will drive growth over the coming years.
In addition to these longer-term initiatives, several government-backed funding schemes are already available – for example:
With an ever-evolving landscape of funding opportunities, we often speak to business leaders who aren’t fully aware of the full range of government schemes available at any given time – and the right people to speak to in order to access these schemes.
Engaging with organisations such as the British Chambers of Commerce and the British Business Bank can help business leaders to stay ahead of updates.
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