Significant rise in UK SMEs borrowing money expected in 2023

• 88% of SMEs plan to lean on business finance and credit in the year ahead

• Seizing growth opportunities (38%) and helping employees with the rising cost of living (34%) are the key drivers

Just 12% have no plans to borrow any money over the next 12 months

The majority of UK SMEs (88%) plan to lean on business finance and credit this year according to new research carried out by solution-led fintech provider Nucleus Commercial Finance (NCF).

As the economic situation continues to challenge the outlook and stability of UK SMEs, it is revealed that only 12% of SMEs say they have no plans to borrow any money over the next 12 months – this rises to 29% when including sole traders and micro businesses.

With interest rates still at record high levels, this is going to place a real financial burden on UK businesses.

The expected borrowing is not, however, solely to patch holes. The reason most commonly cited by small and medium sized businesses is to enable them to seize growth opportunities (38%).

More than a third stated that they plan to borrow in order to help employees with the rising cost of living (34%).

A similar number said that borrowing would be driven by a determination to use it to make the business more environmentally sustainable.

Rising costs and financial stress are still having an impact, however.

A third (33%) of SMEs expect to use business finance to cover unavoidable rising overheads, while one in five (20%) are likely to do so in order to pay off existing debt.

A Manchester firm, which has quadrupled its workforce in less than 2 years, is pushing on with ambitious growth plans for 2023 by adding 20 staff to its legal team this month. Barings Law, who specialise in representing consumers and businesses who’ve been victims of mis-selling, began trading in 2009. The city centre firm is now looking to fill 20 legal posts comprising paralegals and solicitors to run its ever-expanding base of cases.

Practice Manager of Barings Law, Anil Kara, commented: “To see how the firm has developed over the years is truly astonishing. There is a real appetite for automation within the business and investing in tech-driven processes, which will allow us to better serve our clients.

“The single biggest driver for us, is knowing we’re helping people get access to justice. It can be daunting for an individual to take on corporate giants alone, which is why we have a track record of facilitating successful group actions.

“Our ethos is to treat every client as an individual and we’re motivated by the prospect of changing lives for the better.

“Diversifying our claim type portfolio and expanding our team, shows our commitment towards striving for excellence and never standing still.” The private equity backed firm, which helps clients recover their losses around mis-sold vehicle finance (PCP/HP), business interruption and self-invested personal pensions amongst other claims, is now adding more high-profile data breach cases, namely FatFace and South Staffs Water, to its repertoire.

Among the firm’s many prominent wins includes recovering more than £13m in damages for clients following Carphone Warehouse’s £29 million FCA fine over the mis-selling of their ‘Geek Squad’ insurance product.

Barings were also first to secure every leading judgment in unfair relationships involving high cost, short lending and breaches of the FCA’s Consumer Credit Sourcebook.

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