The firm’s research* which surveyed 800 businesses in the UK, finds that 70% expect that they’ll need to apply for additional funding this year. The most common amount expected to be needed was between £10million - £25million. The top reasons noted for this extra funding are to ‘invest in new premises or equipment’ and to ‘invest in R&D or new service offerings’. Over one quarter of those who required funding also said that it would be needed to manage challenges in the market, including to ‘support liquidity requirements linked to challenging trading conditions’ (29%) and to manage the impact of ‘increasing employment costs’ (26%).
However, many businesses do not anticipate it will be easy to secure the extra funding their business requires. In fact, over two thirds (68%) said that their business is currently finding it hard to access new sources of funding. As a result, many (69%) are increasingly turning to alternative lending sources. In fact, the number of businesses who would consider funding from alternative funding sources (82%) such as asset-backed loans or specialist credit funds, or a debt fund, is the same as those who would consider a traditional bank loan (82%).
Larger businesses are also much more confident that their existing lender would support their additional funding needs (92%) compared to the medium-sized businesses surveyed (80%). They are also found to have more flexibility with the funding sources available to them, with 83% of larger businesses prepared to move to a new lender that may be more expensive but offered better terms, compared to 68% of medium-sized businesses. This may reflect the fact that medium-sized businesses’ confidence in their funding position had been on a steady decline throughout 2024 and remained stagnant in December, at -9 percentage points (pp) lower than the start of the year.
A lack of funding is also found to be constraining businesses’ abilities to boost their productivity levels. Of the 68% who noted this as an issue, the biggest barriers they are facing when accessing new funding sources are:
Almost three quarters (73%) of the businesses surveyed believe that the Government needs to do more to help improve access to private sources of funding for businesses. These businesses believe that the Government should prioritise the below actions to address this issue:
George Fieldhouse, Partner and Head of Debt Advisory, Grant Thornton UK LLP, said:
“Access to funding is crucial for driving business growth and while businesses of all sizes are anticipating that they’ll need to access additional funding this year, many are not expecting it to be a straightforward process. High interest rates are an ongoing challenge in the wider market, along with rising input and labour costs – exacerbated by the increases to employer NI contributions and National Minimum Wage announced in the Budget – and, for some sectors, exposure to waning consumer confidence. These issues are likely increasing businesses’ need for further funding while also impacting their ability to access it.
“While borrowing is still constrained by high base rates and strict lending criteria, there are different options available. The beginning of the year is a good opportunity for a business to assess whether their current financing is the best deal on offer and explore alternatives to high-street banks, such as challenger banks, private debt funds, and also Government-backed lending schemes. There are also a significant number of debt funds that can offer a range of different debt structures and options. This is key in the current environment as, when coming to refinance, many businesses may find that the deal they secured a few years ago is no longer available to them with that same lender.
“Accessing new or additional funding can be a complex process and so preparation is key. All businesses need to be able to demonstrate strong business fundamentals, including evidence of performance, robust and maintainable revenues, and controlled costs. Increasingly, borrowers also need to be able to demonstrate that their ESG credentials will support a lender's ability to meet its own sustainability commitments.”
With many businesses struggling to access the finance they need, Grant Thornton outlines five actions that businesses can be taking now to be prepared as possible for re-financing, including:
*Censuswide, on behalf of Grant Thornton UK LLP, surveyed senior decision makers in 800 UK businesses (600 medium-sized businesses with revenue from £50million - £1billion and 200 larger businesses with revenue £1billion+) in December 2024.
Press Release
Majority of businesses struggling to secure additional funding required to support their growth
27 Jan 2025
New research from leading business and financial adviser Grant Thornton UK LLP finds that, while many businesses expect they will need to secure additional funding to support their growth this year, the majority are currently finding it difficult to access the funding required.
The firm’s research* which surveyed 800 businesses in the UK, finds that 70% expect that they’ll need to apply for additional funding this year. The most common amount expected to be needed was between £10million - £25million. The top reasons noted for this extra funding are to ‘invest in new premises or equipment’ and to ‘invest in R&D or new service offerings’. Over one quarter of those who required funding also said that it would be needed to manage challenges in the market, including to ‘support liquidity requirements linked to challenging trading conditions’ (29%) and to manage the impact of ‘increasing employment costs’ (26%).
However, many businesses do not anticipate it will be easy to secure the extra funding their business requires. In fact, over two thirds (68%) said that their business is currently finding it hard to access new sources of funding. As a result, many (69%) are increasingly turning to alternative lending sources. In fact, the number of businesses who would consider funding from alternative funding sources (82%) such as asset-backed loans or specialist credit funds, or a debt fund, is the same as those who would consider a traditional bank loan (82%).
Larger businesses are also much more confident that their existing lender would support their additional funding needs (92%) compared to the medium-sized businesses surveyed (80%). They are also found to have more flexibility with the funding sources available to them, with 83% of larger businesses prepared to move to a new lender that may be more expensive but offered better terms, compared to 68% of medium-sized businesses. This may reflect the fact that medium-sized businesses’ confidence in their funding position had been on a steady decline throughout 2024 and remained stagnant in December, at -9 percentage points (pp) lower than the start of the year.
A lack of funding is also found to be constraining businesses’ abilities to boost their productivity levels. Of the 68% who noted this as an issue, the biggest barriers they are facing when accessing new funding sources are:
Almost three quarters (73%) of the businesses surveyed believe that the Government needs to do more to help improve access to private sources of funding for businesses. These businesses believe that the Government should prioritise the below actions to address this issue:
George Fieldhouse, Partner and Head of Debt Advisory, Grant Thornton UK LLP, said:
“Access to funding is crucial for driving business growth and while businesses of all sizes are anticipating that they’ll need to access additional funding this year, many are not expecting it to be a straightforward process. High interest rates are an ongoing challenge in the wider market, along with rising input and labour costs – exacerbated by the increases to employer NI contributions and National Minimum Wage announced in the Budget – and, for some sectors, exposure to waning consumer confidence. These issues are likely increasing businesses’ need for further funding while also impacting their ability to access it.
“While borrowing is still constrained by high base rates and strict lending criteria, there are different options available. The beginning of the year is a good opportunity for a business to assess whether their current financing is the best deal on offer and explore alternatives to high-street banks, such as challenger banks, private debt funds, and also Government-backed lending schemes. There are also a significant number of debt funds that can offer a range of different debt structures and options. This is key in the current environment as, when coming to refinance, many businesses may find that the deal they secured a few years ago is no longer available to them with that same lender.
“Accessing new or additional funding can be a complex process and so preparation is key. All businesses need to be able to demonstrate strong business fundamentals, including evidence of performance, robust and maintainable revenues, and controlled costs. Increasingly, borrowers also need to be able to demonstrate that their ESG credentials will support a lender's ability to meet its own sustainability commitments.”
With many businesses struggling to access the finance they need, Grant Thornton outlines five actions that businesses can be taking now to be prepared as possible for re-financing, including:
*Censuswide, on behalf of Grant Thornton UK LLP, surveyed senior decision makers in 800 UK businesses (600 medium-sized businesses with revenue from £50million - £1billion and 200 larger businesses with revenue £1billion+) in December 2024.