Added by Love Business East Midlands | October 17, 2024
The British Business Bank’s fourth Nations and Regions Tracker, published today, finds that the use of external finance has increased to almost half (48%) of smaller businesses in the East Midlands, up 13 percentage points on the previous year.
- The use of external financing increased to 48% in 2023, an increase of 13 percentage points compared to the previous year.
- 55% of smaller companies see more threats than opportunities in the recent landscape.
- Share transactions down 9% in East Midlands in 2023, but in early 2024 there are signs of stabilization
However, the report also found that 55% of smaller businesses in the area consider current trading conditions to present more threats than opportunities.
The use of external financing recovers in 2023
The use of external finance among smaller businesses saw notable growth across the UK, with 11 out of 12 countries and regions recording a rebound. The East and West Midlands, the North East, the South East, Northern Ireland and Wales all experienced double-digit growth.
Businesses in the East Midlands increasingly turned to credit cards as a form of external financing: 20% of smaller businesses used this type of loan in 2023, up 9 percentage points on the previous year, one of the largest increases. observed highs.
Nationally, credit cards were also the most used and fastest growing type of financing, with almost one in five (17%) smaller businesses using them, highlighting the challenges for businesses seeking external financing.
Cautious optimism among smaller companies, but challenges remain
Smaller companies showed renewed interest in external financing in 2023, with an increasing number using it to pursue investments that had previously been delayed. Of those surveyed, 36% said they would be willing to use financing to help them grow and 34% of businesses anticipated the need to use financing in the next 12 months, suggesting continued growth for the market in the region.
Although inflationary pressures had begun to slowly ease in 2023, a majority (55%) still considered current trading conditions to present more threats than opportunities and more than three-quarters (76%) were still feeling the impact of rising costs.
Announced equity deals decreased, but stabilization expected in 2024
The UK stock market saw a decline in the number of deals announced across all countries and regions in 2023, reflecting current economic challenges.
The East Midlands was found to be one of the most resilient regions, experiencing just a 9% decline in the number of equity deals announced to a total of 58 deals, down from 63 the previous year.
The number of equity deals announced outside London fell 22% year-on-year to 1,098, while total investment fell 48% to £3.27bn.
At the national level, the first signs of the first half of 2024 indicate stabilization, with positive prospects for next year. In the first quarter of 2024, equity financing for smaller UK companies increased by 7% compared to the same period in 2023, pointing to renewed investor confidence.
British Business Bank drives impact across the UK
The British Business Bank has continued to provide significant support to smaller businesses across the UK through its debt and equity financing programmes, focusing on benefiting businesses outside London.
In February 2024, the British Business Bank launched the Midlands Engine Investment Fund II, a £400 million fund aimed at unlocking additional funding to help smaller businesses in the Midlands thrive and thrive. In the West Midlands, the fund has so far provided more than £1 million to smaller businesses across the region.
The Bank’s geographically focused funds provided £236 million in equity financing to more than 200 companies located outside the capital in 2023, with a particular focus on supporting spin-outs in regional markets, highlighting its commitment to fostering innovation and growth in nations and regions.
Victoria Mears, UK Network Director for Midlands, British Business Bank, said:
“Interest in external funding appears to be growing among smaller businesses in the East Midlands, indicating confidence in their growth plans.
“It is important that companies access the right type of external financing. “The British Business Bank is here to help founders in our region do just that and realize their growth ambitions for the future.”