After peaking in the second quarter of 2020, following the outbreak of the COVID-19 pandemic, lending to small and medium enterprises (SMEs) in the United Kingdom (UK) decreased overall. In the second quarter of 2023, lending to UK SMEs amounted to 4.8 billion British pounds, compared to 7.6 billion British pounds in the first quarter of 2021.

In a survey conducted between October 2023 and April 2024, small and medium enterprise (SME) employers in the United Kingdom (UK) were asked what amount of external finance they obtained in the past 12 months. The largest share of SMEs (23 percent) stated that they did not obtained any external finance or obtained finance amounting to between 25 thousand British pounds and 100 thousand British pounds at that time. Only less than 0.5 percent of SMEs in the UK stated that they secured financing amounting to more than ten million British pounds in 2023.

United Kingdom Credit Cond: CL: L3: Availability of Credit: Small Business data was reported at 11.200 % Point in Jun 2018. This records an increase from the previous number of 0.000 % Point for Mar 2018. United Kingdom Credit Cond: CL: L3: Availability of Credit: Small Business data is updated quarterly, averaging 1.300 % Point from Dec 2009 (Median) to Jun 2018, with 35 observations. The data reached an all-time high of 26.800 % Point in Sep 2010 and a record low of -9.400 % Point in Sep 2014. United Kingdom Credit Cond: CL: L3: Availability of Credit: Small Business data remains active status in CEIC and is reported by Bank of England. The data is categorized under Global Database’s UK – Table UK.KB020: Credit Conditions Survey: Corporate Lending: Last 3 Months.

In a survey conducted between October 2023 and April 2024, small and medium enterprise (SME) employers in the United Kingdom (UK) were asked if they were using any of the given types of external finance for their businesses. The largest share of respondents (37 percent) stated that they used credit cards. A further 28 percent of SME employers stated that they used bank overdraft facilities for their businesses in 2023.

Abstract copyright UK Data Service and data collection copyright owner.

In January 2004, a consortium of public and private sector organisations commissioned Warwick Business School to carry out the United Kingdom Survey of Small- and Medium-sized Enterprises' (SME) Finances, 2004. This was the first representative survey of SMEs to offer a close analysis of businesses with fewer than 250 employees, their main owners and their access to external finance. A second survey was conducted in 2008, where business owners were interviewed by telephone about the finances they have used or applied for in the last three years, their financial relationships, the characteristics of the business and personal details.

In 2007, another consortium of UK public sector bodies, small business representative organisations and finance providers agreed to sponsor a similar survey to the 2004 survey, conducted by the Centre for Business Research based at the University of Cambridge. This study is held at the UKDA under SN 6049, with the title United Kingdom Survey of Small- and Medium-Sized Enterprises' Finances, 2007. It aimed to compile another benchmark and to identify any changes or trends that had emerged since 2004, but made a number of changes to the 2004 questionnaire, so that it is not a direct member of the UKSMEF series, but stands alongside it as a separate cross-sectional survey. The UKSMEF 2008 survey was conducted by the same Principal Investigator as the 2004 survey, based at Warwick Business School, and the 2008 report provides direct comparison between the 2004 and 2008 surveys.

The aims of the 2009 survey were to:

• provide benchmarking data on the availability of credit to SMEs and the types of finance used
• collect information on the relationship between SMEs and their providers of finance
• develop a general purpose micro database for quantitative research on business finance (offering, for example, scope for comparisons with the US Survey of Small Business Finances)

The 2009 sample consisted of 1,250 follow up interviews with businesses interviewed for the 2008 survey. Telephone interviews were conducted by IFF Research Ltd during autumn 2009. These interviews focused on the cost and availability of overdrafts and term loans to businesses in the previous year due to policy makers concerns about the affect of the Credit Crisis on bank lending to SMEs. The data can be used for panel data analysis, in conjunction with UKSMEFs 2004 and 2008, or for standalone cross-sectional analysis. A set of population weights is included in the dataset so that this analysis can be weighted to the UK SME population. These weights were calculated using statistics provided by the Department of Business, Innovation and Skills Enterprise Directorate - see Business population estimates, formerly 'SME Statistics'.

Further information may be found on the ESRC UK Survey of SME Finances 2009 Follow On Study award webpage.


Main Topics:

Topics covered in the survey included

• personal characteristics of the owner/manager
• firm demographics
• providers of finance
• use of current accounts, deposit accounts, trade credit, commercial loans and mortgages, assets and asset-based finance, credit cards and equity finance
• income and profits and balance sheet information

Forecast: New Business Lending for SMEs in the UK 2024 - 2028 Discover more data with ReportLinker!

The main reason for small and medium enterprises (SMEs) to apply for external financing in the United Kingdom (UK) in 2023 was working capital, indicated by 58 percent of companies who had done so. A further 31 percent of UK SMEs who sought financing claimed to have applied to purchase fixed assets.

Underlying data from the publication 'Research to understand the barriers to take up and use of business support' [URN 11/1288]. Data from a survey of 1,202 employer SMEs in England undertaken in March 2011. The survey was designed to provide statistically robust evidence of business use and non use of external business support services, differentiating between private sector and public sector sources of both routine information and strategic advice. The survey aimed to produce a broadly representative sample of SME employers and used a random stratified sample from the Experian database adopting quotas in order to capture sufficient numbers of businesses across key categories (age, size, sector, region). The data presented in the published report was weighted by size band to correct for over-sampling amongst larger SMEs.

Survey data on UK small and medium sized enterprise (SME) finance rejection rates.

This statistic illustrates the quarterly value of new bank loans, including overdraft approvals to small and medium enterprises (SMEs) in the United Kingdom (UK) during the fourth quarter of 2018, by sector. An enterprise is classed as an SME based on their staff headcount, and their turnover or balance sheet total. Small enterprises have less than 50 employees and less than ten million euros in turnover or balance sheet total, whereas medium-sized enterprises have less than 250 employees, less than 50 million euros in turnover, or less than 43 million euros in their balance sheet total.

SMEs often rely on external financing such as loans and overdrafts. In the fourth quarter of 2018, the real estate, professional services and support sector had approximately 1.8 billion British pounds worth of new loans approved. It was was also the sector with highest volume of loans approved. More in-depth information could be found in the Statista dossier on small and medium enterprise financing in the UK.

United Kingdom Gross Lending: MFIs: SMEs data was reported at 4,464,000,000.000 GBP in Apr 2019. This records an increase from the previous number of 4,180,000,000.000 GBP for Mar 2019. United Kingdom Gross Lending: MFIs: SMEs data is updated monthly, averaging 4,639,000,000.000 GBP from May 2011 (Median) to Apr 2019, with 96 observations. The data reached an all-time high of 5,240,000,000.000 GBP in Jan 2016 and a record low of 2,745,000,000.000 GBP in Nov 2012. United Kingdom Gross Lending: MFIs: SMEs data remains active status in CEIC and is reported by Bank of England. The data is categorized under Global Database’s United Kingdom – Table UK.KB016: MFIs Lending to Non Financial Businesses: By Size of Business.

United Kingdom Credit Cond: CL: N3: Small Business: DU: Total data was reported at 11.200 % Point in Jun 2018. This records an increase from the previous number of 6.700 % Point for Mar 2018. United Kingdom Credit Cond: CL: N3: Small Business: DU: Total data is updated quarterly, averaging 9.300 % Point from Jun 2007 (Median) to Jun 2018, with 45 observations. The data reached an all-time high of 47.000 % Point in Mar 2011 and a record low of -10.600 % Point in Jun 2016. United Kingdom Credit Cond: CL: N3: Small Business: DU: Total data remains active status in CEIC and is reported by Bank of England. The data is categorized under Global Database’s UK – Table UK.KB021: Credit Conditions Survey: Corporate Lending: Next 3 Months.

United Kingdom Credit Cond: CL: N3: Small Business: DL: Total data was reported at 8.800 % Point in Jun 2018. This records a decrease from the previous number of 11.600 % Point for Mar 2018. United Kingdom Credit Cond: CL: N3: Small Business: DL: Total data is updated quarterly, averaging 10.900 % Point from Jun 2007 (Median) to Jun 2018, with 45 observations. The data reached an all-time high of 55.500 % Point in Jun 2007 and a record low of -34.700 % Point in Jun 2008. United Kingdom Credit Cond: CL: N3: Small Business: DL: Total data remains active status in CEIC and is reported by Bank of England. The data is categorized under Global Database’s UK – Table UK.KB021: Credit Conditions Survey: Corporate Lending: Next 3 Months.

This statistic illustrates an evolution of the percentage of small to medium enterprises (SMEs) requiring collateral on bank loans drawn down (excluding commercial mortgages) in the United Kingdom (UK) form 2011 to 2018. It can be seen that the share of loans requiring collateral increased overall, reaching a value of 41 percent as of 2018.

United Kingdom Credit Cond: CL: N3: Demand from Small Business data was reported at -0.900 % Point in Sep 2018. This records an increase from the previous number of -2.000 % Point for Jun 2018. United Kingdom Credit Cond: CL: N3: Demand from Small Business data is updated quarterly, averaging 2.300 % Point from Dec 2009 (Median) to Sep 2018, with 36 observations. The data reached an all-time high of 28.900 % Point in Mar 2013 and a record low of -23.400 % Point in Dec 2011. United Kingdom Credit Cond: CL: N3: Demand from Small Business data remains active status in CEIC and is reported by Bank of England. The data is categorized under Global Database’s United Kingdom – Table UK.KB021: Credit Conditions Survey: Corporate Lending: Next 3 Months.

Data underlying the report of a study that assesses and quantifes the impacts of the financial crisis and subsequent global economic recession on the growth and performance of UK SME employers. Analyses existing data from two previous survey sources on SME employers in the pre-recession and recessionary periods. Covers how the problems in the banking sector have affected the supply of finance to the SME sector, and whether this has depressed business performance and investment. Looks at the impact of the recession has been more serious for particular types of entrepreneurs and businesses.

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Unsecured Business Loans Market Size 2025-2029

The unsecured business loans market size is forecast to increase by USD 4,023.4 billion at a CAGR of 11.3% between 2024 and 2029.

The market is experiencing significant growth due to the increasing number of Small and Medium-sized Enterprises (SMEs) seeking financing solutions. These businesses often lack the collateral required for secured loans, making unsecured loans an attractive option. Strategic partnerships between market participants are also driving market growth, as they enable lenders to expand their reach and offer more competitive pricing. However, the market faces challenges related to compliance and regulatory requirements, which can make it difficult for lenders to navigate the complex regulatory landscape. Ensuring adherence to these regulations is crucial to maintain trust and transparency in the market. However, there are concerns regarding consumer preferences, potential predatory lending practices, and the impact of automation and data analytics on underwriting and credit scoring algorithms. Overall, the market is poised for continued growth, with SME financing needs and strategic partnerships fueling expansion, while regulatory compliance remains a key challenge.

What will be the Size of the Market During the Forecast Period?

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Unsecured business loans have become an essential financing option for Micro, Small and Medium Enterprises (MSMEs) and Small and Medium Enterprises (SMEs) seeking working capital to fuel their growth. Unlike secured loans that require collateral, unsecured business loans are based on the borrower's creditworthiness, credit score, income, and business financials. The risk associated with unsecured business loans is generally higher than secured loans due to the absence of collateral. Lenders assess the borrower's ability to repay the loan based on their credit history, income, and business financials. First-time borrowers may face additional scrutiny during the loan application process. Regulatory issues play a crucial role in the market.
Furthermore, governments and regulatory bodies worldwide are implementing stricter regulations to protect consumers and ensure fair lending practices. digital lending platforms have emerged as a popular alternative to traditional lending institutions, offering convenience, flexibility, and faster loan processing times. Consumer preferences have shifted towards unsecured loans due to the convenience and flexibility they offer. While secured loans require collateral, unsecured loans do not, making them an attractive option for businesses that do not have assets to pledge as collateral. Interest rates for unsecured business loans are typically higher than secured loans due to the increased risk. Credit cards offer an alternative form of unsecured financing for businesses.

How is this market segmented and which is the largest segment?

The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in 'USD billion' for the period 2025-2029, as well as historical data from 2019-2023 for the following segments.

End-user

  SMEs
  Large enterprises


Type

  Short term loan
  Medium term loan
  Long term loan


Geography

  North America

    Canada
    Mexico
    US


  Europe

    Germany
    UK
    France


  APAC

    China
    India
    Japan


  South America

    Brazil


  Middle East and Africa

By End-user Insights

The SMEs segment is estimated to witness significant growth during the forecast period.

Unsecured business loans have become an essential financing solution for small and medium enterprises (SMEs) seeking funds without collateral. The adoption of these loans has increased due to the limitations of traditional banking options. Unsecured business loans offer flexibility, quick access to funds, and alleviate the need for collateral. SMEs can utilize these loans for various purposes such as working capital, new projects, and expansion plans. Online enterprises and new firms particularly benefit from unsecured business loans due to their convenience and speed. Loan servicing companies facilitate the process, ensuring a seamless experience for borrowers. The length of these loans varies, with EMIs (Equated Monthly Installments) allowing for manageable repayment plans based on cash flow. Unsecured business loans are a valuable financial tool for SMEs, providing a viable alternative to traditional banking options.

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The SMEs segment was valued at USD 3,168.7 billion in 2019 and showed a gradual increase during the forecast period.

Regional Analysis

North America is estimated to contribute 37% to the growth of the global market during the forecast period.

Technavio's analysts have elaborately explained