More than half of SMEs need funding to power growth

More than half of the UK’s small businesses say they will need to secure finance to invest in growth plans for 2026, according to new research from Novuna Business Finance.

The survey of 1,244 small business owners found that 53% will require external funding or finance to support expansion, with demand for finance highest in London (65%), followed by the North East (62%), Yorkshire and Humberside (58%), and Wales (54%).

The data suggests that the need for finance is not primarily driven by distress but by ambition. Among firms forecasting rapid expansion, 71% said they would need funding to power growth, compared with 49% of those expecting to contract or decline.

The findings come ahead of the Autumn Budget, with many small business owners already concerned about potential tax increases. Novuna found that 86% fear Budget measures could harm their growth prospects, particularly rises in National Insurance (59%), VAT (50%), income tax (50%), and fuel duty (37%).

The survey also indicates that growth forecasts among small firms have fallen to a five-year low, with only one in four (25%) predicting expansion in the months ahead.

If funding cannot be secured, many businesses say they will put key plans on hold. One in three (33%) would scrap plans to hire new staff, while 28% would delay new product launches. A quarter said they would postpone IT upgrades, and 24% would defer investment in new machinery or production lines. Around 20% said cashflow pressures could prevent them from paying suppliers on time.

Jo Morris, Head of Insight at Novuna Business Finance, said the findings highlight a gap between political talk of growth and the practical needs of small firms.

“There is so much talk about economic growth, but at times there seems to be a lack of understanding of what is needed to create it,” Morris said. “Our study shows clearly that the growth forecasts of UK small businesses have fallen to a five-year low for the final months of 2025. The vast majority are extremely concerned about any Autumn Budget tax hikes that few enterprises feel they can absorb – and at the very time when they are looking for funding to support growth plans; whether this be investing in new equipment, hiring people, or modernising IT capabilities.”