Credit, Collections & Insolvency News
New research from SME lender ThinCats shows significant confidence in growth but an even split for those believing the Government is creating the right environment.
The research which was conducted after the Chancellor’s Budget among more than 2000 UK SMEs shows that 81% of businesses are confident that their business would grow next year. Confidence was highest among mid-sized businesses (employing 50-249 people) (86%) compared to 70% of small businesses (1-49 employees) and 64% of sole traders.
The three biggest challenges seen as the greatest challenge to businesses are the general economy i.e. people and companies delaying decisions or not spending (37%), cost inflation (37%) and competition (29%). These were closely followed behind by energy (26%) and staffing costs (23%).
Almost half (49%) of businesses say that in light of the Budget, they were confident that the Government is creating an environment for business growth whilst 53% said the changes to employer NICs would affect their business negatively. 39% also highlighted the impact of the increase in the National Minimum Wage.
When asked how they plan to respond to the NICs increases, 37% said they intend to increase customer prices, 31% said they would reduce salary increases. One quarter (25%) said they will reduce recruitment efforts. Mid-sized business 26% businesses said the changes would mean explore greater automation and technology to manage costs.
When asked about changes to CGT and Business Asset Disposal Relief, 27% of business owners said it would likely lead them to sell their company earlier.
Ravi Anand, Managing Director, ThinCats said “Post-Budget, we know from speaking to many borrowers and corporate finance advisors that there is both a sense of relief and frustration which is borne out in this survey. The relief is that for the first time in a few years, businesses hare able to plan ahead with some certainty of the broader fiscal and political environment. There is however clear frustration with the impact of changes in NICs and the minimum wage, especially in sectors such as care homes and hospitality, and in the end consumer and employers will largely bear the impact of these changes.
“Our survey highlights that mid-sized business are highly confident of growing in the next year and government can assist with greater clarity its growth initiatives, particularly assisting with the skills gap. Debt continues to be key enabler of growth and the survey highlights the continued rise of alternative lenders as key source of capital.
“Overall, this survey and our direct feedback from our borrowers sets up 2025 to be a bumper year for organic and inorganic growth for mid-sized SMEs.”