We’re here to help businesses access the finance they need to thrive - Barry McCulloch

As we head into a new tax year, many smaller businesses will be thinking about budgets for the next 12 months and how to continue building resilience during challenging times. External finance may already be part of this conversation among some business owners, but for others there remains a lack of awareness about the options available to them.

That was one of the key findings from our latest research looking at the views of the Scottish business advisory community, conducted by Ipsos UK. We spoke to a range of accountants, lawyers, business support specialists and brokers to get an overview of the key challenges and opportunities they are coming across through conversations with smaller businesses and entrepreneurs. Nearly two-thirds (65 per cent) pinpointed a lack of awareness of finance options as the biggest barrier to demand.

Furthermore, around another two-thirds of the professionals who took part in the research said that demand for finance exceeded supply (63 per cent). In practice, that means many smaller businesses in Scotland are likely to struggle to access the level of funding and investment needed to support their growth.

Against the backdrop of economic uncertainty, it is unsurprising to hear that many smaller firms have an anticipated need for additional finance in the year ahead. According to the people we surveyed, demand for finance was considered strong across all stages of development for Scottish small businesses, whether they are just starting up (81 per cent strong demand), looking to scale up (80 per cent), consolidating success (56 per cent) or navigating uncertainty (83 per cent).

Barry McCulloch, senior manager, UK Network, Scotland at the British Business Bank.

Drivers of demand for businesses across all parts of the UK include an increase in new businesses post-pandemic and the desire to make improvements to reduce energy consumption. According to our 2022 SME Finance Survey, around four in ten (37 per cent) smaller businesses in Scotland were anticipating growth in the year ahead.

To help turn their ambitions into a reality, however, many smaller businesses are likely to require financial support. Two-thirds (65 per cent) of the business advisory community said that expansion was the most important driver for smaller businesses taking on additional finance.

On the other hand, our research also pointed towards a range of macroeconomic reasons which could potentially prevent small firms from realising their ambitions. Economic constraints and energy costs were highlighted as the most prevalent issues with 83 per cent and 75 per cent respectively saying these were the main reasons preventing smaller businesses from growing.

The Bank’s aim is to encourage and support smaller businesses to access the right type of finance that is best suited to their needs, particularly for supporting goals such as growth. For any Scottish entrepreneurs and business owners looking for more information about the options available to them, we have created a free-to-use online Finance Hub and interactive Finance Finder to help try to close some of the gaps.

We understand that the business finance landscape and support network can be complex and difficult to navigate. We know that the demand exists, so access to insight and expertise is a crucial piece of the puzzle which can help businesses to thrive – and, alongside our partners, we are here to help.

Barry McCulloch, senior manager, UK Network, Scotland at the British Business Bank.