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State of the Nation

Where SMEs Are Borrowing & UK Sectors And Regions Set For Growth In 2015

By January 13, 2015 No Comments
Where SMEs Are Borrowing & UK Sectors And Regions Set For Growth In 2015

Many of Britain’s SMEs have high hopes for 2015. Indicators are that a good proportion has plans for greater investment, increased levels of employment, and business expansion over the coming year. But which industry sectors are looking particularly positive – and which are less sunny in their outlook? Does ambition vary in different parts of the UK? What factors could potentially hold enterprises back in the months ahead? And what does the business Boost Capital did in 2014 tell us to expect across Britain this year?

More Firms Want To Grow

After several years of tough trading there’s evidence of increased optimism among Britain’s small business community. Strong performance towards the end of last year has put SMEs in a good position for growth in the coming months, recent data from the British Chambers of Commerce (BCC) suggests.

Boost Capital has analysed its own figures from 2014, as detailed in the infographic below, and found firms sought funding for a variety of reasons, business growth being a major one.

  • Just under a third took out our short-term loans to manage their cash flow.
  • About 17 per cent needed money for expansion. The same proportion wanted to borrow for renovation.
  • A need for new equipment was the motivation for nine per cent of Boost’s customers in 2014.

2014 Boost Recap Infographic_w620px_v2

Where Businesses Are Borrowing

Some regions were hungrier for capital last year than others, according to Boost’s data.

  • The South East is the region where we saw the most activity in 2014, with almost a fifth of all of Boost’s loans taken out in that area.
  • The Midlands was the next busiest part of the country, followed by Yorkshire, then the South West.
  • London came fifth in Boost’s borrowing league table, despite having the greatest concentration of SMEs in the country.
  • The East of England, the North West, and Scotland were next, all having similar levels of borrowing last year.
  • Wales, Northern Ireland, and the North East were the regions least likely to seek out funding.

Regions With Growth Potential

Attitudes vary across the UK when it comes to expectations for growth in the year ahead. Firms in Northern Ireland, Yorkshire, and the North East are the least hopeful of experiencing growth in the first six months of 2015, according to research from HSBC Commercial Bank. Elsewhere, expectations are quite high.

  • SMEs in the West Midlands have the biggest plans for expansion, with more than nine out of ten saying they actively plan to grow their operation this year, the HSBC findings say.
  • East Anglia and the South West are the next most ambitious regions, with more than 80 per cent of business owners hoping for bigger things.
  • About 77 per cent of businesses in the South East expect to grow, and more than three-quarters in the North West have similar hopes.
  • Firms in Wales and Scotland are relatively upbeat about 2015, with 71 per cent saying they will expand in the first six months of the year.

Sectors Showing Positive Signs

Attitudes towards growth do vary hugely between industries. Last year, Boost saw activity in some areas more than others.

When it comes to 2015, technology is one area that is seeing huge innovation, and 84 per cent of digital businesses are confident about the economic climate, according to the HSBC research. Next comes the energy sector, with three-quarters of energy firms voicing positive feelings for the year ahead. Services are also buoyant, as are SMEs in the pharmaceuticals industry. Even 59 per cent of businesses in agriculture are feeling hopeful. But there are other unexpected green shoots:


Small retailers have suffered high levels of closure in the face of reduced consumer spending, plus punishing competition from larger brands. But one area where smaller operators are showing great optimism is in online retail. SMEs selling goods via the internet say 2015 could be good for them. Almost 65 per cent of e-tailers have plans to increase the channels through which they sell this year, according to research from the Royal Mail. One in four expects to use major online platforms such as eBay and Amazon Marketplace to grow their business. About one in five even sees opening a physical shop as an opportunity.


More than half of small and medium-sized manufacturers in Britain reported an increase in productivity over six months in 2014, according to the most recent data available from the Manufacturing Advisory Service, and almost two-thirds expect to grow sales by March 2015. Plans for expansion include investment in new technology, machinery and premises, as well as increasing employment, and improving skills.  

A Less Optimistic Outlook

There are areas where external conditions – and excessive caution – are arresting firms’ ambitions.


Exports are on the up, but the UK still has a way to go to match the EU average of one in four SMEs exporting. In Britain, it’s still one in five. The good news is more support has been announced for companies interested in trading overseas, as we discussed here recently.

SMEs with Government contracts

The Government’s recent commitment in the Autumn Statement to bring down public spending could hit firms with public sector contracts. Equally, many departments may look to renegotiate contracts at a lower rate.

Mining and quarrying, and oil and gas

The expansion in fracking created a short-term boost for SMEs in this sector in 2014, but growth slowed last year, and this is expected to continue into 2015. This will be partially fuelled by low commodity prices, the Centre for Economics and Business Research predicts, and the falling oil price is also likely to have a damaging effect on smaller UK players operating in that field.

Barriers To Progress

It’s great that so many firms are finding reasons to be cheerful, but some elements and uncertainties could still throw a spanner in the works of SMEs’ growth plans.

Continued lack of access to finance

We know businesses can’t grow without money for expansion. And about 55 per cent of SMEs said a lack of capital would hamper their growth plans this year, according to a recent Business Boost Report by Opus Energy. The banks still aren’t lending to small companies, and too few yet realise alternative sources of funding exist. Boost Capital hopes the message reaches business owners in 2015 that short-term lenders could help them achieve their expansion dreams.

Red tape tangle

Regulation affecting small firms still holds back many, and some shun business growth for fear of the extra paperwork involved. Business groups have also been quick to criticise the large number of SME support schemes that currently exist, causing many firms to wonder where to go to seek definitive help. A rationalisation of legislation along with a simplification of initiatives and bodies supporting business growth could remedy this confusion.

General Election expectation

Many are calling May’s election the hardest to predict for a century. In the meantime, businesses struggle to put any plans into effect until the result – and next Government – is decided. The economy will be at the centre of the parties’ campaigning, but what this all means for SMEs once the votes are in will have to be seen.

Nevertheless, it’s a brighter overall outlook than SME owners have had for some time. Wherever your company, and whatever it does, Boost Capital wishes you the best of business in 2015.

Speak to a member of our business loans team on 0800 138 9080

More businesses than ever before are looking to Boost Capital for their business financing needs. To learn more about how our UK small business loans work or to explore the business financing options that are available to you, contact us today!
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