The opinions expressed here are those of the authors. They do not necessarily reflect the views or positions of UK Finance or its members.

Yet, the broader economic landscape remains challenging. The recent Autumn Budget has introduced higher tax and wage burdens, particularly impacting sectors like hospitality and retail. Geopolitical conflicts continue to disrupt markets, adding to the complexity of business operations. This article shares some of the key findings from our recent research, understanding the issues small businesses are facing and how lenders are adapting to changing customer needs. 

Resilience: A strategic imperative

In this environment, resilience has become a strategic imperative. Our research reveals that energy costs (74 per cent) and supply chain issues (66 per cent) are the top long-term concerns for businesses. Despite these challenges, there is a growing sense of optimism. Our findings show that 59 per cent of small businesses feel more positive about the economy than a year ago, and 63 per cent expect to be at least as profitable, if not more so, than last year.

Emerging positivity and strategic shifts

This cautious optimism is reflected in the changing reasons for accessing credit. While improving cash flow and creating safety nets were the primary reasons in 2023, the leading reason in 2024 is funding business expansion. This shift indicates that businesses are not just surviving but are beginning to position themselves for growth.

Building resilience through strategic actions

Businesses are employing a range of strategies to strengthen their resilience. These include diversifying portfolios and supply chains, recruiting and retaining skilled employees through upskilling and flexible working arrangements, and maintaining low prices and profit margins. As a result, demand for lending has increased, particularly in the service sectors, with commercial lending showing significant growth.

The role of lenders in supporting growth

Lenders have seen stable or growing demand for credit, with many anticipating even greater demand from SMEs over the next 12 to 18 months. However, they are also exercising greater caution, with nearly half increasing their affordability reviews to ensure safe lending practices. This cautious approach is welcomed by SMEs, who recognise the protective benefits of increased verification.

The future of lending and business growth

Both SMEs and lenders are increasingly aligned on the importance of stronger customer data for making informed decisions. While resilience remains crucial, businesses are now looking to capitalise on future growth opportunities. The journey from surviving to thriving is well underway for many businesses. By continuing to focus on resilience and leveraging strategic lending, businesses can navigate the current challenges and position themselves for future success. As we move forward, the collaboration between SMEs and lenders will be pivotal in driving sustainable growth and economic stability.

Find out more about how SMEs are building resilience and using affordable credit for business growth in the Experian SME Affordability Report.