50+ UK Business Loan Statistics 2024

For generations, business loans have been used by companies of all sizes to add an influx of cash in times of need. From start-up companies to established brands, business owners often make applying for a business loan their first port of call when seeking financial support to grow their company or overcome short-term issues. 

With recent challenges, such as COVID-19 and the cost-of-living crisis, many businesses have sought external finance to cope with the rising cost of daily operations.

Our research has gathered over 50 of the most prominent UK business lending statistics for 2023, including information on average borrowing, approval rates and the size of the UK commercial lending market.

Top seven UK business loans statistics 2024

• Gross lending for UK businesses is expected to hit £488 billion in 2024. 

• The overall value of UK SME bank loans reached £59.2 billion in 2023 – down 9% from 2022.

• London topped UK mainland regions with the highest rate of SME borrowing for loans and overdrafts (£21.45 billion) in the first half of 2023.

• Nearly two in five (39%) SMEs used external finance in 2022

• More than two-thirds (69%) of SMEs claimed their reason for requiring external finance was “cash flow related”.

• More money was borrowed in the South East per start-up loan than in any other UK region, with an average amount of £10,179. 

Bank of England business loan interest rates

The Bank of England’s (BoE) base rate is the interest rate set by the UK’s central bank. It changes regularly in response to the country’s current economic state. Commercial banks and lenders use the BoE rate as a guide when setting interest rates on business loans and other forms of borrowing.

On 3 August 2023, the BoE’s base rate was set to 5.25% – the highest rate since 2008. The base rate has risen sharply since 2021 in an attempt to reduce inflation. It had previously fallen to a historic low of 0.1% in 2020 during the COVID-19 pandemic.

In June 2023, the annual growth rate of borrowing by small-to-medium enterprises (SMEs) was down 4.2% on the previous June – up from -4.3% in May 2023.

How much is the UK business loans market worth?

The latest UK business lending statistics found that gross lending for UK businesses is projected to be valued at £488.1 billion in 2024 – a 2% fall from 2023 (£496 billion).

A breakdown of the total value of UK business lending by year from 2013-2024

UK business lending has increased significantly since 2016, when it stood at just over £389 billion. By 2020, this figure had climbed by 15% to £447.3 billion before falling slightly (-2%) in 2021. By 2022, it had risen again by 4% compared to the previous year. 

Since 2023, business lending has dropped by 1.61% to £488.1 billion, though this remains the second-highest rate of lending since 2011 (£495.5 billion), after 2023 (£496 billion).

How much are UK SMEs borrowing?

Recent small business lending statistics found that the total value of SME bank loans in the UK reached £59.2 billion in 2023. This marks a 9% decrease from 2022 (£65.1 billion). Despite this fall, 2023 still ranks as the joint third-highest (tied with 2016) on record, behind 2020 (£104.9 billion) and 2022 (£65.1 billion).

A breakdown of the gross value of bank loans to UK SMEs between 2017 and 2023

SME bank lending remained steady between 2017 and 2019, going from £57.3 billion to £56.9 billion, respectively, before accelerating to over £100 billion (+84%) during the COVID-19 pandemic in 2020.

Though a 44% drop between 2020 and 2021 brought the numbers back to their pre-pandemic rates, the 2022 figures marked only the second time that the gross value of SME bank loans exceeded £60 billion.

Despite the rise between 2021 and 2022, the drop in the latest figure tof £59.2 billion means lending remains more than two-fifths (44%) lower than the industry’s 2020 peak of £104.9 billion. 

Which UK region has the most SME borrowing?

According to a UK Finance report, London had the highest level of SME borrowing in mainland Britain in the first half of 2023. The outstanding value of the capital’s business loans and overdrafts totalled £21.45 billion – more than a fifth (22%) of mainland Britain’s total lending for the first half of 2023.

A regional breakdown of the total outstanding value of business loans and overdrafts for Great Britain (GB) SMEs in the first half of 2023

The latest business lending stats show that southern regions dominate SME borrowing. The South East (£12.54 billion) and South West (£10.57 billion) are the only regions besides London with outstanding loans and overdrafts of more than £10 billion. 

The North East was the region with the lowest level of borrowing in the first half of 2023, with a total outstanding value of £2.94 billion. The North East also showed the biggest decrease in outstanding value, dropping by 7.62% between H2 2022 and H1 2023.

All UK regions saw a decrease in total outstanding value of business loans and overdrafts between the end of 2022 and the beginning of 2023. The South West had the smallest decline at 4%, while the average for Great Britain was -5.26%. 

How much are SMEs relying on invoice finance and asset-based lending?

The latest UK business loan stats found a considerable increase in invoice finance and asset-based lending for SMEs between 2021 and 2023. During the first two quarters of 2021, the total value of invoice finance ranged between £1 billion and £1.5 billion.

Asset-based lending first exceeded £1.5 billion in the third quarter of 2021 before climbing above £2 billion in the second quarter of 2022. Things have remained relatively stable since then, with the total value of invoice finance and asset-based lending standing at approximately £2.1 billion during the first quarter of 2023.

UK business lending statistics over time, based on business size

In February 2024, loans to SMEs were down 4.9% on the previous year. After a peak in lending between April 2020 and April 2021, lending to SMEs declined between April 2021 and April 2022.

How much do SMEs borrow on average?

An SME report from the British Business Bank found an increase in the average business loan size for SMEs between 2021 and 2022. The median average value of SME loans in 2022 was £14,000 – a 40% rise from the year before when the median value was £10,000.

A breakdown of the median value of business loans by type of business in 2021 and 2022

(Source: British Business Bank)

These increases aren’t as obvious when breaking down SMEs into various categories. The median average value of loans for SMEs with no employees has remained consistent across both years (£10,000), as have the figures for SMEs with employees (£25,000). 

UK business lending statistics over time, based on sector

Lending to most non-financial industries fluctuated greatly in the 12 months to February 2024, excluding real estate, professional services and support activities, which experienced only one month of decreased spending.

A breakdown of UK business lending statistics to non-financial businesses between March 2023 and February 2024

The transport industry saw the greatest decrease in lending between 2023-24, with only three months in the last 12 showing increased borrowing. The manufacturing industry also suffered a drop in lending in February, though by considerably less (-£350 million).

Conversely, the construction industry underwent an increase of £109 million in lending for the month, following a consecutive three month downward trend in borrowing.

Lending to the real estate industry is the most stable of all UK industries, with only one instance of a decrease in lending in the past 12 months - June 2023 - when lending dropped by £965 million.

How many UK SMEs require external finance?

The latest UK business lending statistics found that two in five (39%) SMEs sought external finance in the three years leading up to 2022. This represented a 20 percentage point 20% decrease from 2021, when the number of SMEs using finance for their business stood at almost three-fifths (59%).

There was a significant difference between the size of SMEs and the typical business loan amount sought in 2022. Just over a third (35%) of UK businesses with zero employees required external finance in the last three years, compared to half (50%) of SME employers.

In Q3 and Q4 2022, just over half (51%) of SMEs met the definition of a permanent non-borrower: an SME that is not currently borrowing and is considered unlikely to do so.

What are the most popular types of external finance in the UK?

Bank overdrafts, government grants and business credit cards were the most popular forms of external finance used between 2019 and 2022. Around 12% of UK SMEs used at least one of these borrowing options in the three years leading up to 2022.

Although government and local grants remain among the most common forms of external finance, the number of SMEs seeking these types of finance has declined dramatically since the previous year, when just over a quarter (26%) applied for a government or local grant.

Conversely, the percentage of SMEs seeking overdrafts remained identical between 2021 and 2022, while the number applying for credit cards dropped by just 1%.

A breakdown of the percentage of SMEs who applied for various forms of external finance in 2021 and 2022

Only bank loans and loans from directors or other individuals and organisations saw an increase in demand between 2021 and 2022 (from 7% to 10%, and 10 to 11%, respectively).

External finance from bank overdrafts remained steady in demand, at 12% in 2021 and 2022. 

Most popular reasons for UK businesses seeking external finance

The main reason SMEs gave for seeking external finance in 2022 was for working capital (53%). The purchase of fixed assets and investing in business growth were tied at 27% as the second-most common reasons for applying for external finance.

The number of SMEs that required external finance in order to keep their business afloat was lower than those looking to invest in their business, at just under a third (30%) in total – 23% to deal with recovery and 7% for refinancing purposes.

How concerned are SMEs about repaying external finance?

Four in five (80%) SMEs that accepted an external finance offer in 2022 stated that they weren’t concerned about their ability to repay the loan. However, almost a fifth (17%) of SMEs admitted they were concerned – this group is more likely to seek financial advice in the future (28%) than those not concerned (8%).

A breakdown of how concerned, or otherwise, SMEs are about their ability to make full repayments as and when they become due

Number of SMEs considering more than one financial provider

In 2022, more SMEs who wanted to borrow were considering more than one financial provider compared to 2021 – a rise of 12% (32% versus 20%, respectively). This is the highest proportion since 2019, when just over a third (34%) of SMEs were looking into more than one option. 

Amount of external finance by business size

The value of external finance sought by SMEs is generally proportional to business size. Medium-sized companies more often applied for larger amounts (£300,000 median), while small and micro businesses are more likely to apply for significantly less finance (£50,000 and £24,000 median value, respectively).

How confident are SMEs about obtaining external finance

Almost three in five (58%) SMEs feel confident in knowing how to go about obtaining information on external finance, should they wish to apply for it. However, this is down on the previous year. Those who neither agree nor disagree about knowing where to find this information has risen to one in five.

A breakdown of how confident SMEs feel in knowing where to obtain information on the types of finance and specific providers available

Meanwhile, just under a fifth (18%) of SMEs don’t know where to obtain information on providers and types of finance available.

How many UK SMEs are considering applying for external finance in the next 12 months?

More than two-fifths (43%) of SMEs are considering seeking external finance in the next 12 months. 

Medium firms make up the highest proportion of companies considering some form of external finance, at three in five (60%). The likelihood of considering external finance is directly proportional to company size, with small firms slightly less likely to think about taking credit than medium ones (51%). For micro firms the figure stands at 47%.

What type of external finance do UK SMEs anticipate using in the next 12 months?

For the two-fifths (43%) of SMEs considering applying for finance in the next year, the most common form of finance considered is government and local government grants, representing almost one in five (19%).

Of those SMEs who anticipate using funding in the next year, just 13% say they will look into bank overdrafts, while one in 10 (11%) will look to directors or other individuals and organisations for their funding.

External finance statistics by region

SMEs in the East Midlands, North East, and Northern Ireland are more confident in their ability to find financial information than the rest of the UK.The capital, London, sits in the middle, with almost three-fifths (57%) of SMEs comfortable with their knowledge of external finance, and just under a fifth (17%) unsure about seeking out information on providers and finance options.

A breakdown of external finance statistics by UK region

Wales records the greatest number of SMEs who don’t feel confident in their knowledge, with more than a quarter (28%) unsure on where to find external finance information.

How many UK SMEs are approved for business loans?

The latest UK business lending statistics indicate that the UK’s seven largest banks are being more cautious in lending to small businesses.

The approval rate for SME loan applications increased slightly in Q1 2023 to 71%, from 69% in Q4 2022. However, in Q2 2023, this success rate underwent a sharp decline to just 45%, the lowest approval rate on record.

By comparison, the pre-pandemic average SME loan approval rate was 82%. 

A breakdown of the percentage of SMEs who had their external finance application by business size

The most dramatic rise occurred between SMEs with no employees and those with one to nine employees, with acceptance rates accelerating from 57% to 79% (+22%). This is followed by another sharp rise of 9% for SMEs with 10-49 employees.

By the time we reach the largest business category (50-249 employees), the application success rate for external finance stands at 98%. This means that 49 out of every 50 applications from the UK’s biggest SMEs are likely to succeed. 

What are the main reasons SMEs take out loans?

Business lending statistics from SME Finance Monitor for the fourth quarter of 2022 show that “cash flow” was the most common reason for borrowing money, with more than two-thirds (69%) of SMEs giving this as their reason for applying. This was followed by “working capital”, which was cited by nearly half (49%) of SMEs. 

A breakdown of why funding was required by UK SMEs in Q4 2022

(Source: SME Finance Monitor)

The number of SMEs borrowing to cover a short-term funding gap decreased dramatically in 2022 as the size of the business increased. Less than one in 10 (9%) of SMEs with 50-249 employees sought funding for this purpose, compared to 39% of businesses with no employees. 

Similarly, one in five (20%) of SMEs sought finance to cope with the impact of the COVID-19 pandemic. Yet, only 1% of the largest companies (50-249 employees) cited this as a determining factor, compared to more than a fifth (22%) of zero-employee businesses.

Unsure whether or not to seek external finance? Our comprehensive guide will help you decide whether borrowing could boost your business.

A breakdown of why funding was required by UK SMEs in 2022 by year

(Source: SME Finance Monitor)

The SME Finance Monitor report found that more than a third (37%) of SMEs stated that “business development” was their primary reason for requesting additional funding in 2022 – 18% more than any other purpose. This represented a 13% rise since 2021, when less than a quarter (24%) gave this as their reason for getting a business loan.

A breakdown of why funding was required by UK SMEs in 2022 by business size

(Source: SME Finance Monitor)

Around one in five (19%) of SMEs sought finance to “fund expansion in the UK”, a rise of 10% from 2021, while 14% of all SMEs sought finance to “fund new plant machinery”, a figure that rose to almost a quarter (23%) for SMEs with 50-249 employees.

Want advice on how to get a business loan? Visit our comprehensive business loans guides for expert tips on this and more.

UK business start-up loan statistics

The latest UK business statistics reveal that the total number of UK start-up loans exceeded 100,000 in February 2023. The government-backed scheme has provided more than £1 billion in funding to those starting a business between its launch in 2012 and February 2024.

Of those loans, two in five (40%) went to women, and one in five (20%) to people from Black, Asian, or other ethnic minority backgrounds. Young entrepreneurs also benefited, with 14% of start-up loans going to people aged between 18 and 24, representing a cash flow of £100 million.

Which region borrows the most in start-up loans?

Newly launched businesses in the South East borrow the most on average, with the average start-up loan in the area standing at £10,179. The region’s overall value of start-up loans is just under £102 million. According to business lending statistics, that is the third-highest figure behind London and the North West.

Although London’s total loan value of £192 million is substantially higher than the South East, it’s average loan value £9,204 is 9.5% lower. This is because more than twice as many start-up loans were issued in London compared to the South East (20,937 vs 9,997).

A regional breakdown of the total number of UK start-up loans and their average value

Aside from the South East, Wales was the only other region with an average loan value exceeding £10,000. Its figure of £10,012 indicates that Welsh start-up companies’ average loans are around 12% more than those in Scotland and almost 16% more than those in Northern Ireland.

Northern Ireland’s average start-up loan was the lowest of any UK region, at £8,661. This figure was around 3% less than the next lowest region (Scotland) and 15% less than the South East. Northern Ireland also recorded the lowest overall loan value, with around £13.3 million (93% less than London’s).