81% of SMEs missed growth opportunities last year. Here’s what’s driving the funding gap

Four in five (81%) UK small businesses missed at least one significant growth opportunity in 2025 due to a lack of finance. That’s the headline finding from Lovey’s SME Outlook report, which surveyed 504 SME owners across retail, manufacturing, hospitality and construction.

That’s not a marginal finding given it suggests the vast majority of UK small businesses entered 2026 having left something on the table in 2025. However, it’s interesting to note that the report doesn’t appear to reflect a crisis of confidence, with 77% of SME owners saying they feel positive about their business prospects in 2026, and 71% expecting to seek external finance in the coming year.

The appetite for growth is clearly there, but what’s missing for too many businesses appears to be the bridge between wanting to grow, and being able to act on it.

What’s driving the gap

The most obvious answer regarding why businesses are struggling is that costs are rising.  But the data reveals a more nuanced crunch point. While the tax burden (25%) and rising costs (24%) are the headline barriers, the trigger for seeking finance often comes down to a choice between two categories: survive or thrive.

• The ‘survive’ cohort (56%): Many SMEs are seeking additional funds simply to meet existing financial obligations. The single biggest trigger here seems to be the combination of supplier price increases and late payments (24%), followed by urgent cash flow gaps (14%).

• The ‘thrive’ cohort (43%): Conversely, a significant portion of the market is currently looking to invest in the future. Their primary motivations are expansion (17%) and equipment purchases (14%).

The report also identifies a “squeezed middle” of businesses with a turnover between £500k and £1m, making them too established to qualify for some forms of early-stage support, but not yet large enough to be able to easily absorb major financial shocks. These SMEs were, perhaps unsurprisingly, the most likely to be held back, with 74% saying they missed multiple opportunities in 2025 due to a lack of finance.

And the consequences of constrained investment are already visible in the labour market. According to Novuna Business Finance, plans to hire new staff among small businesses have just hit a five-year low, with only 14% of SMEs planning to take on new employees this spring. 

Hiring is often one of the most direct ways a business can invest in its growth, which makes that finding particularly significant. Businesses may have the ambition to expand, but without the right finance in place, headcount decisions are likely to be among the first to be deferred.

Sector and regional variation among surveyed businesses

The national headline masks some regional variation. In the East Midlands, 96% of SMEs reported missing at least one opportunity due to lack of finance, making it the highest of any region in the study. Wales followed at 94%, with London at 91%.

Among the four sectors surveyed, appetite for external finance also varied. Hospitality businesses were the most likely to have sought it (89%), followed by manufacturing (71%), retail (66%) and construction (56%). 

Given the well-documented pressures hospitality faces around energy costs and changing consumer habits, many businesses in this sector would undoubtedly have needed finance not just to grow, but to adapt. For some in the sector, 2026 looks like it could well be another year of simply trying to keep heads above water. 

What this means for SME owners

This report arrives at a moment when small business sentiment is finely balanced. Confidence is holding up, but so too are the pressures that made 2025 such a difficult 12 months for many. For some business owners, those challenges have become even more pronounced.

For a large proportion of SMEs, the issue isn’t a lack of ambition or a dearth of viable ideas. Rarely is this the case. Rather, it’s the ability to access funding at the right moment, exactly as an opportunity arises, that’s a major hurdle.

Historically, the lending landscape hasn’t done much to help. Criteria, rates and approval timelines can vary wildly between providers, and for time-poor business owners, navigating those differences can become a barrier in itself. In some cases, it’s a degree of complexity that can lead viable businesses to delay or abandon applications altogether.

The money.co.uk business loans eligibility journey has been designed specifically to simplify that process, allowing business owners to see the loans they’re most likely to be eligible for, based on a few straightforward questions, without any impact on their credit score. What’s more, 87% of users who complete the journey find themselves eligible for funding.

For SMEs, the confidence is there, the appetite for finance is there, and the ambition is there. The opportunity now is to make sure the means to act are in place before the moment to act arrives.