28th February 2019

Small businesses cautious ahead of Brexit but half still plan to grow in 2019

Three in 10 small businesses expect Brexit to have a negative impact on their business, but just over half remain optimistic about growth in the year ahead.

Those are among the headline findings of the British Business Bank’s 2019 Small Business Finance Markets report, which provides a comprehensive and impartial assessment of finance markets for smaller businesses in the UK.

The annual report, published recently, found that one in three small businesses expect accessing finance to become more difficult after Brexit, with only 3% expecting it to become easier. And overall, demand for external finance has continued its long- term fall, with just 36% of smaller businesses using external finance in 2018 (versus 44% in 2012).

The report suggests that Brexit has led to a shift in behaviour among some smaller businesses. There is evidence that some are delaying making longer term investment and expansion decisions ahead of Brexit and reducing their demand for external finance, while others appear to be using external finance to put in shorter term contingency plans.

Despite those concerns just over 50% of small businesses said they still aspire to grow over the next 12 months and the good news is that their awareness of finance choices continues to grow. More than half of all businesses – 52% – are aware of peer to peer lending, which is up from 47% in 2017; 69% are aware of venture capital (up from 62%) and 70% are aware of equity crowdfunding (up from 60%).

This increased awareness will be an important factor in ensuring that smaller businesses are better placed to make the right finance choices as uncertainty diminishes and confidence returns.

At the British Business Bank we have put in place a series of measures to address many of the issues identified in this year’s Small Business Finance Markets Report, including the £40m Cornwall & Isles of Scilly Investment Fund.

This is just one of three regional funds in the UK and is designed to address gaps in the market for small business finance in the region. The fund is administered by appointed fund managers the FSE Group and provides commercial debt and equity finance in amounts of between £25,000 and £2 million to small and medium sized businesses to help them grow.

Find out if the fund could help your business at www.ciosif.co.uk

Ken Cooper is Managing Director, Venture Solutions, at the British Business Bank.