South East records highest small business loan and overdraft approval in the UK

The British Business Bank’s fourth annual ‘Nations and Regions Tracker’ finds that the South East performed well in 2023 with regard to external finance usage, with it rising in the region by 12 percentage points.

This increase was slightly higher than the 10 percentage point growth seen across the whole of the UK in 2023.  

Although the number of announced equity deals declined across the South East and all Nations and regions of the UK in 2023, H1 2024 shows signs of stabilisation.

Businesses in the South East of England are cautiously optimistic

The growth in finance usage in the last year reflects cautious optimism about the economy among smaller businesses, alongside persistent challenges such as high borrowing costs and ongoing economic uncertainty, the report found.

This optimism is evidenced by 46% of smaller businesses across the UK using external finance in 2023, which represented a 10 percentage point increase from 2022.

The South East was 1 percentage point above this national average, with 47% of smaller businesses using external finance, a 12 percentage point increase from 2022. Use of credit cards experienced a particularly steep rise in the region, from 10% to 21%.

Use of loans and overdrafts up

There were positive signs for the region’s small business core debt market. The first half of 2024 saw a 21% increase in the volume of approved loans and overdrafts from the top SME lenders in Great Britain compared to the first half of 2023, with the South East experiencing the largest uptick by 50%.

This follows an increase of 10% on the same measure for the South East in 2023, which compared well to the 9% fall seen at the UK level over this period. 

Equity deal numbers are down but early 2024 indicates signs of recovery

The number of equity deals in the South East decreased by 26% in 2023 versus 2022, while the decline in the value of announced equity deals in the region stood at 56%.

On the other hand, early signs from 2024 suggest a more promising outlook. While the South East’s deal numbers in H1 2024 were still down relative to the first half of 2023, they were 4% higher than in the second half of last year. 

Steve Conibear, director, UK Network – South & East of England at the British Business Bank, said: “While we continue to face a challenging economic environment, it is encouraging to see a renewed appetite for external finance among the business community.

“This year’s Nations and Regions Tracker captures a mood of cautious optimism throughout the UK, and one which will hopefully see an uplift this year and beyond.

“The South East saw especially promising growth at the beginning of this year, and the increase in approved finance will make a huge difference to business in the region.

“We stand committed to helping small businesses access the finance they need throughout the region, building on what we have already done.”  

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