Blog | RateSetter

Small business confidence rises, but credit availability falls

By Paul Marston

This week, the Federation of Small Businesses (FSB) published research which showed that UK small business confidence bounced back in the last quarter of 2016, hitting levels last reported before the EU referendum campaign began.

It is clearly good news that more small businesses are feeling confident about their futures - small businesses are absolutely vital to the economy, accounting for around 60% of private sector employment.

However, the picture isn’t universally rosy. For one thing, the report notes that confidence varies significantly by region – while most regions have become more upbeat, London and Scotland are lagging behind with confidence still standing in negative territory.

Importantly, the FSB survey also highlights a troubling trend for small business finances: despite interest rates being at a record low level, the availability and affordability of credit for small business has actually worsened. It’s therefore more important than ever to raise awareness of all the finance options available to small businesses.

Accessing the right kind of finance at the right time can be a highly effective way for a small business to raise productivity and grow (for example, by buying new assets, expanding output taking on more employees). Fortunately, there are grounds for optimism as the provision of finance from newer sources such as peer-to-peer lending platforms continues to increase year-on-year.

We are committed to supporting creditworthy businesses in the UK, and the FSB’s research shows just how important this is.