Businesses ‘still can’t lay their hands on funding’ - report

One in five Northern Ireland SMEs experience barriers in accessing finance

One in five SME owners in Northern Ireland say they are struggling to access finance (Alamy Stock Photo)

One in five small firms in the north can’t access funding, a first-of-its kind report into SME access to finance has found.

The study, published by Enterprise NI and the British Business Bank, found that 21% of SMEs in Northern Ireland experience barriers to accessing finance – a rate which places it significantly ahead of Scotland (38%), but slightly behind Wales (20%).

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 firms the least likely (15%).

Overall, 56% of SMEs in the north said they have used external finance, with Mid Ulster (65%) and Belfast (64%) reporting the highest usage, with the lowest in the north west (48%).

The report also found that 38% of Northern Ireland SMEs anticipate the requirement of additional funding, but only (51%) are confident they will obtain the necessary capital, despite the required amount being £50,000 or less.

The report found that 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.

But that is much more optimism than in Scotland or Wales, where just 38% and 22% of SMEs respectively expect growth in the next year.

Covid-19 loans were the most used sources among those in Northern Ireland who used external finance (28%).

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.

access to finance
Michael McQuillan, chief executive of Enterprise NI

Enterprise NI chief executive Michael McQuillan 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 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.”

StartUp Loans
British Business Bank director Susan Nightgale (Brian Morrison)

Susan Nightingale, director for the UK devolved nations network at the 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, businesses require access to capital. This report provides us with valuable insights that will help us better support SMEs.”