Over one in five Northern Ireland SMEs experience barriers in accessing finance

A first-of-its kind report into SME access to finance has found that 21% of SMEs in Northern Ireland experience barriers to accessing finance – a rate which places Northern Ireland significantly ahead of Scotland (38%), but slightly behind Wales (20%). Over half of SMEs were also found to be expecting growth within the next year.

The most frequently reported issues for those experiencing barriers to finance include: lack of awareness or availability of finance options/support (37%); ability to obtain/repay finance (24%); and poor perceptions of/relationships with finance providers (15%). Mid Ulster SMEs were the most likely to report barriers to accessing finance (41%), with Fermanagh SMEs the least like to report such barriers (15%).

Overall, 56% of Northern Ireland SMEs reported the use of external finance, with Belfast (64%) and Mid Ulster (65%) SMEs reporting the highest usages of external finance and North West (48%) SMEs reporting the lowest usage. This overall usage rate was higher than Wales (49%), but significantly behind Scotland (62%).

The report, published by Enterprise Northern Ireland and the British Business Bank, found that just under four in 10 (38%) Northern Ireland SMEs anticipate the requirement of additional funding, but just over half of these (51%) express confidence that they will obtain this funding, a rate significantly lower than those of Scotland (68%) and Wales (65%). 76% of the Northern Ireland SMEs anticipating the need for extra funding required £50,000 or less. Confidence in securing funding was at its highest in the South region of Northern Ireland (57%) and at its lowest in the North West (29%).

54% of SMEs are expecting growth within the next year, with 30% expecting stability, 11% expecting a contraction, and 5% reporting difficult conditions/risk of closure. These figures show a great deal more optimism in Northern Ireland than in Scotland or Wales, where 38% and 22% of SMEs respectively expect growth in the next year.

Covid-19 loans were the most used sources amongst those in Northern Ireland who used external finance (28%), differentiating the region from Scotland and Wales, where credit card debt was the dominant mode of external finance. Also notable within the statistics was the fact that Fermanagh SMEs showed a higher inclination to report using other loan products and business overdrafts, while Belfast SMEs were more likely to report using equity and external investment finance. The report highlights equity’s lack of presence within the Northern Ireland SME market, with only 3% of SMEs surveyed attesting to its use, compared with 6% in Scotland.

Speaking upon the launch of the report, Michael McQuillan, Chief Executive, Enterprise NI, said: “With half of those business seeking further funding not confident about obtaining it, we must continue working to understand and address this lack of confidence. We must ensure that entrepreneurs and small business owners, throughout the region, are more aware of and can more easily access the right finance at the right time for their business.

“Enterprise Northern Ireland saw a record year in both our Start Up Loans and our NI Small Business Loan fund in the financial year ending April 2024, and April and May 2024 have seen the current financial year get off to an even better start. It is clear that the appetite is there and the entrepreneurial spark has returned to Northern Ireland. The onus is now on capitalising on this appetite through government and enterprise working together to remove any barriers to the accessing of finance.”

Susan Nightingale, Director, UK Network Devolved Nations, British Business Bank said: “Whether a med-tech start-up in the North West or an agri business in Fermanagh, to realise their full potential, small businesses across Northern Ireland require access to capital. This report looks at how funding requirements and attitudes to finance vary across the regions, providing us with valuable insights that will help us better support smaller businesses.”


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