The use of external finance by smaller UK businesses remained broadly stable in 2024, according to the British Business Bank’s fifth Nations and Regions Tracker.
The report found that while overall usage steadied after a strong rebound the previous year, a growing number of firms are once again open to seeking finance to support growth.
The proportion of smaller businesses willing to consider external finance rose by five percentage points to 38% in 2024, reflecting a modest revival in risk appetite. However, almost one in five businesses that were open to seeking finance still believed it would be difficult to obtain, underscoring a cautious mood across the sector.
USE OF EXTERNAL FINANCE STABILISES
Across the UK, 45% of smaller businesses used external finance in 2024 – a marginal one-point fall from the previous year but consistent with a stabilising trend following the sharp recovery in 2023. Northern Ireland had the highest proportion of smaller firms using finance, at 52%, while the North West and East of England recorded the strongest growth, up by five and three percentage points respectively.
By contrast, the East Midlands, North East and Wales saw notable declines. The most common forms of borrowing remained unchanged, with credit cards used by 15% of firms, followed by overdrafts (11%) and leasing or hire-purchase (10%).
GROWING APPETITE FOR RISK
The findings suggest that attitudes toward borrowing may be slowly shifting. Data from the BVA BDRC SME Finance Monitor showed the share of “Ambitious Risk Takers” – firms wanting to grow and willing to take risks – increased from 27% to 31% over the year.
The West Midlands recorded the sharpest increase in openness to external finance, up 20 percentage points, while Yorkshire and the Humber saw a rise in firms planning to apply or renew facilities, up nine points to 16%.
Despite these signs of confidence, sentiment remains muted. Many businesses appear to be waiting for clearer signs of economic recovery before committing to new borrowing.
EQUITY INVESTMENT WEAKENS
Equity investment across the UK slipped by 2.5% to £10.8bn in 2024, with deal volumes down 15% – the lowest since 2018. Early data for 2025 suggests the slowdown is continuing, reflecting continued uncertainty in the wider market.
Nevertheless, several regions outside London showed resilience. The North West posted an 11% rise in deal numbers and a 46% increase in investment value, driven by strong market performance. The South West also recorded an improvement in deal intensity, narrowing the gap with the capital.
The East of England outperformed most other regions on investment value per high-growth enterprise, led by the Cambridge and Peterborough area, which recorded 82 deals worth £748m in 2024 – second only to London, though down on the previous year.
BRITISH BUSINESS BANK EXPANDS REGIONAL REACH
The report highlights the expanding role of the British Business Bank in supporting smaller firms across the country. In 2024-25, 84% of businesses newly supported by the Bank were based outside London, an investment expected to generate £4.7bn in additional gross value added and support more than 22,000 jobs.
The government’s £6.6bn funding commitment in June 2025 will increase the Bank’s total financial capacity to £25.6bn. This includes £350m for new Nations and Regions Investment Funds in the East and South East of England, extending coverage to every part of the UK outside the capital.
The Regional Angels Programme has also been expanded by £340m following record activity in 2024-25 and will support a broader network of angel investors and innovation-focused enterprises.
Richard Bearman, chief development officer at the British Business Bank, said: “In the face of a challenging economic environment, it is encouraging that use of external finance has remained stable.
“This year’s Nations and Regions Tracker also indicates that optimism is brewing for small businesses and we hope to see this reflected in their use of external finance in the near future.
“The British Business Bank is pivotal to providing businesses across our regions with access to the finance they need.
“With the expanded capacity of the Bank under the Modern Industrial Strategy, we are poised to build on our existing work across the nations and regions, including the new investment funds for the South East and East of England.”
