High-growth SMEs warn expansion plans have been hindered by lack of funding


Half of the UK’s most dynamic, high-growth SMEs say their growth aspirations and expansion plans have been hindered by a lack of suitable funding over the past three years, according to new research.

High-growth SMEs are defined as businesses that have seen annual revenues grow by more than 20 per cent on average over the past three years and/or expect them to grow by more than 20 per cent annually over the next three years.

The study found that around two-fifths of these businesses have specifically been unable to capitalise on a significant growth opportunity – such as acquiring a rival, expanding overseas, moving to new premises and/ or developing new products – due to a lack of sufficient growth-focused funding. A third said they had been turned down at least once for a business loan or funding over the past three years, with 12 per cent saying they had been turned down three or more times. One in seven said they may look to use personal credit cards or personal loans to secure future growth opportunities.

Around a quarter warned it was difficult to find suitable ‘scale-up’ financing solutions that are specifically designed to help businesses seize growth opportunities. More than half said that giving the UK’s high-growth SMEs dedicated funding support to help them invest for growth and expansion was now very important in the wake of the UK Government triggering Article 50 and the UK set to leave the European Union.

The need for effective funding support is highlighted by the fact that the top three priorities for the UK’s high-growth businesses over the next 12 months are to expand marketing initiatives, investing in research and development, and hiring new staff. A third said they would be launching new products and 12 per cent said they would be looking to start to export overseas. Looking at the longer term, a third of the UK’s high-growth SMEs said the aim was to build the business regionally, with a similar number saying the plan was to build a national franchise and almost a quarter saying the long-term aim was to grow internationally.

The study by Santander was commissioned to celebrate the fifth anniversary of Santander’s Growth Capital loans. Growth Capital loans are targeted at UK businesses with annual turnovers of up to £25 million which have a demonstrated history of high year-on-year growth in turnover, profit or employment.

Darren Hart, Head of Growth Capital, Santander Corporate & Commercial, said: “Our research found large numbers of UK businesses looking to invest for growth but unable to access the right type of funding. It’s not just high-growth firms: a third of firms with annual revenues of more than £20 million said their growth business aspirations had been hindered by a lack of funding.

“The research shows that Santander’s Growth Capital loan is just as relevant now as it was when we launched it five years ago to help entrepreneurs and owners of high-growth businesses invest for growth without diluting ownership. We developed Growth Capital to support the high-growth businesses at the heart of the UK economy and are passionate about expanding this funding at this key time for the UK.”