SMEs with access to finance are 70% more likely to succeed, research finds

Small businesses that secure finance from specialist lenders are significantly more likely to survive and grow than the average UK SME, according to new research from Capital Economics commissioned by SME lender iwoca.

The study found that SMEs receiving an iwoca loan were 70% more likely to still be trading three years later than the national average, highlighting the critical role access to finance plays in business success.

The analysis examined more than 23,000 businesses incorporated between 2020 and 2025, matching Companies House data against iwoca’s loan book. It found that 80% of businesses incorporated in 2021 and receiving an iwoca loan in 2022 were still active in 2025, compared with just 46% of all UK businesses established in the same year.

The findings come at a time when many smaller businesses continue to face funding challenges. According to recent research from Intuit QuickBooks, almost half (48%) of microbusinesses reported experiencing cash flow difficulties in 2026, making access to flexible finance a key factor in their ability to grow and survive.

The report also highlights the growing importance of challenger banks, specialist banks and non-bank lenders in supporting UK SMEs. These lenders now account for 68% of gross SME lending, up from 39% in 2012, reflecting a significant shift in the business finance landscape.

Traditional bank lending can often take several weeks to process, with decision times of 20 to 30 working days not uncommon. Specialist lenders have increasingly filled this gap by providing faster access to funding, enabling businesses to seize opportunities and manage working capital more effectively.

The report also assessed iwoca’s wider economic impact. Capital Economics estimates that the lender supported £3.5 billion of UK GDP in the 12 months to January 2026, while helping sustain more than 51,600 jobs and generating around £1 billion in tax revenues.

According to the research, every £100 lent by iwoca supports approximately £230 of GDP across the wider economy.

The lender’s reach extends across the UK, with 79% of funded businesses located outside London. The report identified particularly strong impacts in the North West, East of England, West Midlands and Yorkshire and Humber.

Mark Nathan, founder of CQD Cleaning Services, said access to finance had been fundamental to his company’s growth.

“Throughout our business journey, we’ve always used SME finance. Since starting my cleaning services company, access to finance has been absolutely crucial for our growth,” he said.

“I’m not surprised by the Capital Economics report results suggesting that businesses are 70% more likely to succeed if they have access to finance – that’s something I’ve experienced firsthand.”

“When 99.9% of the UK’s businesses are SMEs, they act as an important proxy for broader economic health,” he said.

“Small businesses with real potential are being held back because many can’t access the finance they need at the right moment – it’s certainly not a lack of ambition.

“What this research shows is that when finance is delivered, businesses are much more likely to weather difficult periods and succeed over the longer term. With better financial support, SMEs tend to grow revenues, hire, build something sustainable and contribute substantially to the economy.”

Janine Hirt, CEO of Innovate Finance, said specialist lenders had become an increasingly important part of the UK funding ecosystem.

“Fintech SME lending was a novel disruptor over a decade ago, and today it has grown to be necessary financial infrastructure,” she said.

“The fact that 68% of UK SME lending now flows through challenger and specialist lenders shows that fintech players have become a mainstay of the SME lending market and a driver of growth.”

Andrew Evans, deputy chief economist at Capital Economics, said the research showed a clear link between access to finance and long-term business performance.

“The scale of the difference in business outcomes between iwoca customers and the wider business population is quite striking,” he said.

“The evidence is clear: flexible, accessible lending is associated with growth beyond individual firms – and with the jobs, output and tax revenues that benefit the wider economy.”