The number of small businesses applying for corporate finance has fallen to a six-year low, a study has revealed.
The research, published by the Federation of Small Businesses (FSB), shows that the withdrawal of coronavirus support schemes is restricting growth.
According to the Small Business Index (SBI), the volume of small business finance applications fell to a six-year low in the three months to September 2021, with just one in 10 (10 per cent) firms seeking new finance facilities.
The proportion of applications being approved by lenders also fell by 18 per cent compared to the same quarter in 2019, meaning just half (52 per cent) of businesses seeking finance received financial support.
In addition, more than half (57 per cent) of those were offered borrowing rates of over five per cent.
Elsewhere, the research shows that one in seven (14 per cent) small businesses reduced headcount in the third quarter, while eight in 10 (82 per cent) are not planning to recruit in the run up to Christmas.
The index – which provides a quarterly overview of business performance – also reveals that four in 10 (41 per cent) exporters are experiencing reduced international sales, while just one in five (21 per cent) are prepared for full customs checks from 01 January 2022.
Commenting on the figures, FSB National Chairman Mike Cherry said: “Too many small exporters – often our most innovative and profitable firms – are struggling to get across new paperwork and preparations for import checks.
“As such, policymakers should revamp and relaunch the SME Brexit Support Fund, widening the eligibility criteria, and making deadlines for applications more realistic.”
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