The ultimate guide to UK small business statistics

Running a small business in the UK in 2026 can feel exciting and uncertain. You might have a great idea, a service people want, or a team that is already making progress. But how do businesses today compare with previous years? What is helping them succeed, and where are they falling behind?

This guide shares the latest UK small business statistics for 2026. We cover how many firms are active across the country, which sectors are performing well, what challenges remain, and how customer expectations are changing the way companies work.

These figures provide a clear view of the small business environment and help you make decisions with confidence.

Let’s look at the state of UK small businesses in 2026 and what it means for you.

1) Confidence & trading conditions

• The FSB Small Business Index sat at -40.7 in early 2025, showing weaker confidence than the long-term average. This tells owners that 2026 could start with low confidence in the small business sector, which may affect spending and hiring.
• 85% of SMEs reported rising costs in 2025, confirming inflationary pressures remain a major concern. High costs in 2025 suggest owners in 2026 still need to watch cash flow closely.
• By the first quarter of 2025, SMEs were reporting a net fall of 25% in revenue compared to the previous quarter. This decline indicates that many firms will enter 2026 with weaker sales momentum.
• Profits also dropped, with a net balance of -36% reporting declines in Q1 2025. Lower profits in 2025 show that owners will have to keep margins tight in 2026.
• Hiring outlook was negative at the start of 2025, with more firms planning cuts than new hires (-2.8%). This means many firms may enter 2026 with smaller teams, affecting growth capacity.
• Investment sentiment was slightly positive, with a net +2.6% planning to invest in the next 3 months of 2025. Some firms are still ready to invest, so opportunities will exist in 2026 despite all the uncertainty.
• Cashflow pressures were high in early 2025, with a net balance of -12% reporting worsening positions. Cash management will remain a top issue for owners moving into 2026.
• In Q1 2025, 41% of SMEs experienced late payments, and nearly 1 in 5 had to write off invoices. This shows that late payments could pose a real threat for 2026, and owners must plan for gaps in income.
• Retail and wholesale businesses showed the weakest confidence among sectors entering 2025. Owners in these sectors may continue to face harder conditions in 2026 compared to others.
• According to SumUp’s 2025 survey, only 20% of SMEs felt very confident about the year ahead, down from 2024 levels. Lower confidence levels in 2025 mean many firms will likely enter 2026 with caution.
• A further 32% felt somewhat confident, also lower than the year before. This suggests many owners may be unsure about 2026 and could delay major plans.
• 40% expressed uncertainty going into 2025, nearly double the share from 2024. High uncertainty in 2025 could signal that 2026 will begin with more hesitation than optimism.
• Rising input costs were the top challenge for 47% of SMEs in 2025. This signals that cost control will remain a priority for 2026.
• 35% considered digital transformation a top priority in 2025, while another third saw it as moderately important. Digital tools will likely continue to shape competition in 2026.
• The SumUp survey drew on the views of 750 SME owners and decision-makers in 2025. This gives weight to the trends that small business owners should keep in mind in 2026.

2) Access to finance & borrowing conditions

• By mid-2024, 41% of SMEs had recently used external finance, down from 50% a year earlier. This shows that fewer firms entered 2025 with fresh borrowing, which may mean tighter credit access for 2026.
• SMEs borrowed £62.1bn from banks in 2024, a 5% rise on the year. Higher lending in 2024 sets the scene for 2026, as firms carry those debts forward.
• Government-guaranteed lending fell to £0.6bn in 2024, just 1% of the total. With less support available, owners in 2026 may have to rely more on commercial lenders.
• Net SME lending was -£3bn in 2024, better than 2023 but still negative. This shows many firms were repaying more than they borrowed, which could limit financial growth in 2026.
• The stock of bank loans stood at £171bn at the end of 2024, down 2.5%. Lower loan stock means that SMEs will potentially enter 2026 with fewer credit lines in place.
• SME overdrafts were also lower, at £8.3bn by end-2024. This means fewer firms may be using overdrafts as backup in 2026.
• Total SME loan and overdraft stock ended 2024 at £179bn. That figure shows the size of borrowing carried into the future years.
• Loan rates peaked at 7.65% in 2024, easing slightly to 7.16% by year-end. Even with small relief, borrowing costs remain high compared to past years.
• Applications for new loans increased to 23,764 in Q3 2024, up 32% year-on-year. Rising applications mean that demand for finance is growing.
• Challenger and specialist banks accounted for 62% of government-backed lending in 2024. Their role is stronger than ever, and owners in 2026 may turn to them more often.
• Of that, £0.4bn was drawn by SMEs, mostly in term loans. This highlights how SMEs entering 2026 will rely on targeted borrowing, not broad lending.
• Around one-third of SMEs still hold debt as they move into 2026. This keeps pressure on repayments and cash flow.
• Nearly a quarter applied for external finance in the past year. Owners in 2026 can expect finance demand to remain steady.
• Only 1 in 10 exporting SMEs have ever used trade-specific finance schemes. This gap shows exporters in 2026 may miss out on useful support.
• Until 2025, almost half of exporting SMEs relied on general external finance. Exporters in 2026 will remain dependent on traditional finance to grow.

3) People, skills & workplace wellbeing

• Workplace conflict costs SMEs an estimated £28.5bn every year. For you, this means disputes are not just stressful but costly, and in 2026, resolving them faster can protect your margins.
• As of 2025, just 6% of SMEs had in-house legal teams. Most likely, you don’t either, which shows why outside advice will be vital in 2026.
• The typical SME faces around three legal issues each year, yet seeks advice in only one of four cases. If you avoid advice, you risk carrying the cost into 2026, often much higher than the fee would have been.
• 45% of SMEs see regulation as a barrier, and most think thresholds are outdated. You may share that view, but in 2026, knowing the rules better could still give you an edge.
• Late payments cost the economy £11bn a year and close 38 firms a day. If you find yourself chasing invoices in 2026, know you’re not alone as it’s a risk across the whole sector.
• SMEs employ 16.6m people in 2025, about 60% of private-sector jobs. That means your business is part of the backbone of UK employment.
• 37% of SMEs report mental-health presenteeism among staff. If you’ve seen this in your team, know that it’s not rare. In 2026, it’ll be a trend you shouldn’t ignore.
• At the start of 2025, 19% of firms expected to cut jobs, while 16% expected to grow. This means that in 2026, hiring may remain cautious, and you might need to do more with lean teams.
• 58% of SMEs expect skills shortages in the next year. If you’re struggling to hire, that matches what most owners are facing.
• The government is spending £1.2bn a year on skills by 2028, with new AI and engineering courses from 2026. These plans could give you more trained workers in the coming year.
• SMEs make up 40% of apprenticeship starts, though the number has fallen since 2018. If you take on apprentices in 2026, you’re part of a shrinking but vital group.
• In 2025, 58% of young people wanted to start a business, and 74% of founders said personal skills mattered most. That means you’re competing in a market full of eager new starters.
• A new Business Mentoring Council and the Help to Grow scheme are running in 2026. If you’re looking for support, you can tap into these resources.
• Retail and wholesale SMEs were the least confident about growth in 2025. If you’re in these sectors, you may still be under more pressure than others.
• 40% of SMEs focused on improving profit margins in 2025, and a quarter invested in staff skills. If you’re doing the same, you’re keeping pace with your peers.
• Employment intentions (Spring 2025): 21% increase staff, 13% decrease, 60% maintain, 6% don’t know. We recommend planning 2026 hiring in small steps and keeping a bench of candidates warm.
• Finding or keeping skilled staff 22% named as a key challenge. For 2026, use training plans and clear role paths to cut churn.
• Upskill or hire: 25% took this step in 2025. If talent is tight, grow skills in-house while you recruit.
• Laying off staff: 8% did this to lower costs. If cuts are on the table in 2026, protect core revenue roles first.

4) Exports & international trade

• UKEF supported £575m of SME exports in 2023-24, a level of backing still relevant for 2026. This shows public finance remains part of the export picture as you plan for new markets.
• UKEF’s lending capacity is being raised to £80bn. That expansion means there could be more credit routes open to you in 2026 if you trade overseas.
• Only 1 in 10 exporters has used trade-specific finance schemes. Many SMEs still miss out on targeted support, which suggests untapped help may exist for your firm in 2026.
• A move to digital, paperless trade could lift SME exports by 13% and cut processing times by 75%. The impact is clear: adopting digital systems in 2026 can speed up your export operations.
• The Electronic Trade Documents Act 2023 is forecast to add £1.1bn to GDP over 10 years. For SMEs, this law makes digital trading safer and faster in 2026.
• Engaging 70,000 SMEs in cross-border e-commerce could generate £9.3bn GVA and 152,000 jobs. Growth in online channels could be a big opportunity in 2026.
• By the end of 2025, digital trade is forecasted to have made up more than half of UK exports. That share shows why digital skills and systems will be central for exporters in 2026.
• Exporters reported weak results in late 2024, but entered 2025 with modest optimism. It means many firms could face 2026 with low but improving expectations.
• 40% of SMEs cite supply chains and energy bills as major drags on trade confidence. These pressures are likely to stay with you in 2026.
• 34% plan to diversify income streams into e-commerce and social platforms. If you’re exploring new channels in 2026, you’re moving with the wider trend.
• Export support is being integrated into the Business Growth Service in 2026. That makes it easier to access help without searching across multiple schemes.
• Trade policy in 2025 leaned toward flexible agreements rather than long FTAs. This continues into 2026, shaping quicker but smaller trade wins.
• Many SMEs still have not adopted e-documents. If you haven’t made the shift yet, 2026 will be the year to act, since global partners are moving faster.
• Regional gaps remain clear: satisfaction with public transport is 28% in the South West vs 65% in London. This makes logistics harder for some regions, and you may feel the effect in 2026.
• UKEF’s impact still depends on banks’ willingness to lend. That means in 2026, your access may still hinge on your banking relationship.

5) Innovation, management & digital adoption

• As of 2025, nearly half of SMEs reported innovating, whether in products, processes, or marketing. For 2026, this means standing still is risky as half the market is already finding new ways to compete.
• 61% of SME leaders met at least one best-practice standard, but only 16% used five or more. If you’re in the majority using just one or two, 2026 is a good time to expand your toolkit.
• Training remained split: 23% ran formal training and 69% relied on informal learning. Your staff skills may depend on which side you sit on - formal training may deliver steadier results in 2026.
• Over half of SMEs sought external advice in the last year. In 2026, advice will have the potential to spark growth.
• Nearly 1 in 5 SMEs faced challenges accessing support in 2024. If you’ve been frustrated with support schemes, you’re not alone.
• 58% of SMEs expect skills shortages in 2025, especially in digital roles. That outlook shapes 2026 as firms that build internal training will have an edge.
• 6% already use AI tools in daily operations. This small but growing group shows where the sector is heading. AI adoption is likely to rise fast in 2026.
• By 2025, 30% of SMEs will have planned to adopt AI, and 22% are already doing so. If you haven’t considered it yet, 2026 is the year to test AI in at least one area.
• 35% ranked digital transformation as critical in 2025. That share signals digital is now a core business issue for 2026, not an add-on.
• Using external advice has been linked to a 22% productivity uplift. Owners who seek outside help may run more productive firms in 2026.
• Innovation levels have slipped to 36% of SMEs, down from almost half a few years ago. The fall suggests that in 2026, fewer competitors may be innovating, which could make your new ideas stand out.
• Entrepreneurial activity is high, with 30% of adults starting or running a business this year. This means 2026 will be more crowded, so building a sharper pitch matters.
• Of start-ups founded in 2020, 47% survived to 2023, and only 2% passed £1m turnover. The lesson for 2026? Survival is possible, but scaling is rare, so plan for steady growth instead of quick wins.
• The government is expanding Made Smarter and new tech adoption schemes in 2025. In 2026, these programmes could be a real resource if you’re upgrading systems.
• £1.2bn per year is earmarked for short AI and digital courses from 2026 onward. That means more affordable training options for your staff are on the way.
• Digital transformation: 35% of small business owners say it’s very important, 33% say it’s somewhat relevant in 2025. For 2026, you should set one digital goal per quarter (e.g., online sales, CRM usage).
• AI plans: 30% planning to use AI, 22% already using AI; 18% may consider it after research. Pick one process for an AI pilot in Q1 2026 and track a single metric.
• AI views: 27% see opportunity, 19% see threat, 22% see both; 13% no need, 4% lack resources, 13% avoid due to risk/ethics. If you’re unsure in 2026, start with low-risk tools (drafting, forecasting) and set guardrails.
• Investing in digital tools or automation: 13% took this step in 2025. In 2026, target one task with high manual time and measure hours saved.
• New products/services: 26% launched something new in 2025. In 2026, run small launches with fast customer feedback to stay relevant.

6) Sustainability, inclusion & the finance gap

• 71% of SMEs have taken at least one environmental step. If you’re not in this group yet, 2026 could be the year to start, or you risk falling behind customer expectations.
• More than half of smaller firms plan to prioritise sustainability in 2025. This shows 2026 will be competitive on green credentials, and waiting could make your business look outdated.
• SMEs account for around half of UK emissions. Your role in cutting emissions is real, as in 2026, energy savings are both an environmental and a financial issue.
• Energy-efficiency improvements could cut SME bills by up to 25%. For 2026, this is a big win: lower bills mean more room for investment elsewhere.
• The government plans to train 18,000 retrofit workers. That means more skilled workers will be available in 2026 to support your green projects.
• In 2025, 67% of minority-led SMEs want strong growth, compared to 38% of others. This ambition shows where competition may be sharper in 2026 - diverse-led firms are pushing harder.
• 45% of minority-led SMEs use external finance, compared to 31% of others. If you’re not using finance, you may be missing growth chances in 2026.
• The government aims to cut regulatory admin by 25%. For you, that could mean less red tape to deal with in 2026, freeing up time for core work.
• New late-payment laws in 2025 target the £11bn drag on SMEs. In 2026, you may see fewer delays in getting paid, though enforcement will matter.
• From April 2026, business rate multipliers for small RHL properties will be lower. That change could reduce your costs if you run a shop, café, or hotel.
• The Start Up Loans scheme is expanding to 69,000 firms. If you need capital in 2026, this could be a route worth exploring.
• Finance access is being simplified with a new Finance Hub and Business Growth Service. In 2026, you’ll have fewer barriers to finding the right funding.
• The Open Finance Roadmap is due in 2026. This could make financial products more tailored to your needs, but only if you take advantage of them early.
• The Growth Guarantee Scheme and ENABLE are expanding in 2025. That gives you more routes to credit in 2026 if banks turn you away.
• New Community ENABLE funding is targeting underserved areas. If you run a firm outside big cities, 2026 could finally bring more finance your way.

7) Equity, venture & private debt

• Equity investment into SMEs reached £6.9bn in the first three quarters of 2024. This shows that capital is still flowing, and in 2026, you may find investors open if your pitch is strong.
• Deal volumes fell to 1,303 in 2024. That drop means fewer deals are happening, so in 2026, competition for investor attention is higher.
• VC-backed exits doubled to £10.4bn in 2024. Investors saw real returns, which means in 2026, they may be more confident backing growth firms.
• The BBB committed £243m across eight funds in 2024. If you’re raising in 2026, some of that funding may still be flowing through the system.
• Private-debt “dry powder” stood at £45.6bn by the end of 2024. This cash is waiting to be deployed, and 2026 could be the moment lenders look harder at SMEs.
• Average fundraising time stretched to 22 months. If you start now, don’t expect fast results. In 2026, patience will be part of raising capital.
• Only one first-time private-debt fund closed in 2024. For new fund managers, barriers remain high, which may limit fresh capital sources in 2026.
• Equity investment levels stayed close to pre-pandemic years. Stability here suggests 2026 may bring steady, not explosive, opportunities.
• The Growth Guarantee Scheme continues in 2025. For you, this means more credit protection into 2026 if lenders hesitate.
• The government is injecting £340m into early-stage equity markets. This could open doors for younger businesses seeking backing in 2026.
• BBB’s lending capacity is rising to £25.6bn. That expansion means more structured finance is on the table for SMEs in 2026.
• ENABLE capacity is going up by £3bn. In 2026, that means more firms will be able to borrow through participating lenders.
• The new Investor Pathways scheme brings in £400m. If you’re an underrepresented founder, 2026 may bring fresh opportunities through this scheme.
• Challenger and specialist banks delivered 62% of government-backed loans in 2024. They’ll likely keep their leading role going forward, making them worth your attention.
• Government-guaranteed lending reached £0.6bn in 2024, the highest since 2022. That tells you support is still alive, though limited, as you plan for 2026.

8) Asset finance, invoice finance & working-capital tools

• Asset finance reached a record £23.5bn in 2024. That record shows SMEs kept investing, and in 2026, asset finance may still be your best route to fund equipment.
• IT equipment leasing grew 6% in 2024. Digital tools remain a key spend, and leasing tech may help you stay competitive without heavy upfront costs.
• Commercial vehicle finance rose 10% in 2024. Logistics and delivery businesses drove that growth, and you may still see lenders active in this sector.
• Business car finance increased by 1%. Modest growth suggests that in 2026, vehicles will still be financed, but not at past levels of demand.
• Plant and machinery finance dropped 2% in 2024. This decline may signal tougher access for manufacturers, so you might need to shop around for better terms.
• Business equipment finance fell 10% in 2024. That drop shows firms pulled back, so 2026 may bring chances to negotiate sharper deals if lenders want to recover volumes.
• Invoice finance and asset-based lending averaged £8.2bn per quarter in 2024. These tools remain important. In 2026, they can help if you’re stuck waiting on customer payments.
• The average advance per client rose to £263,416. If you use invoice finance in 2026, expect higher advance values, which could support bigger contracts.
• By Q4 2024, advances reached about £8bn. Liquidity improved before 2025, so in 2026, lenders may still be open for working-capital needs.
• Asset finance is a critical alternative to large up-front spending. In 2026, spreading costs this way may be the difference between upgrading and falling behind.
• Gross bank lending jumped 12% in late 2024 to £17.2bn. The growth shows appetite was returning, so 2026 could be a good year to revisit lending options.
• SME loan rates eased to 7.16% by the end of 2024. Rates are still high but cooling. In 2026, this could ease pressure if you’re refinancing.
• Despite more applications, demand for new loans stayed low. If you’re applying in 2026, lower demand could mean lenders compete harder for your business.
• Challenger banks closed 2024 with a record £10.3bn quarter.
• Government schemes like GGS and ENABLE continue. For 2026, that means extra security if you’re borrowing under these programmes.

9) Bank lending dynamics & providers

• Challenger banks’ share of SME lending hit 60% in 2024. In 2026, that dominance means you may get better terms from challengers than from the big banks.
• They provided £37.3bn of lending in 2024, up 8% on the year. This growth shows their lending power is rising, so in 2026, they could be more open to new borrowers.
• Big-5 banks lent £24.8bn in 2024, flat in real terms. If you rely on them in 2026, don’t expect much extra flexibility compared to challengers.
• In Q4 2024, challengers lent £10.3bn, their best-ever quarter.
• Big-5 banks issued £6.9bn in Q4 2024, their highest since 2022. They are still active, but in 2026 their share of SME lending may shrink.
• Real-estate lending climbed to 29% of SME lending in 2024. If you’re in property, credit is flowing your way.
• Challenger banks’ real-estate lending rose to £11.8bn, up 18%. They remain strong in this sector, and in 2026, property businesses may find them easier partners.
• Big-5 banks increased real-estate lending by 19% to £6.2bn. Even the big banks are leaning on property, and in 2026, it may still dominate their lending book.
• Challenger banks held 66% of SME real-estate loans by the end of 2024. That shows where their strength lies, and you may benefit if your business has property needs.
• Their lending rose 10% in both Q2 and Q4 2024. This growth shows steady demand, which likely shapes credit terms.
• Overall bank lending hit £17.2bn in Q4 2024, the highest since 2022. For you, this means banks reopened their books, and lending should be more available than in past years.
• SME repayments fell to £65.1bn in 2024. Lower repayments mean debt is being managed more cautiously, a trend you’ll probably see in 2026 too.
• Four new banking licences were granted in 2024. By 2026, this means more providers could be in the market, giving you added choice.
• Government-backed lending had peaked at £56.7bn in 2020 but dropped to £0.6bn in 2024. That sharp fall shows you can’t count on government lending in 2026, as most support has ended.
• Borrowing costs averaged 7.5% in 2024, easing slightly to 7.16% into early 2025. In 2026, rates may stay high compared to pre-2020, so budgeting for costlier loans is still wise.

10) UK SME landscape & structure

• By the end of 2025, the UK will have 5.5m SMEs, 99.8% of all businesses. You are competing in a dense market, so a clear niche matters.
• SMEs account for over a quarter of UK goods exports. If you sell products, it’s a good time to test export channels.
• The largest SME sectors are construction (16%) and professional services (14%). Retail is 10%. Sector crowding is real, and sharper positioning helps you stand out.
• Rural SMEs total 548k, employing 2.7m people. If you run a rural firm in 2026, local hiring and transport remain key planning points.
• The business population fell 1% in 2024. With fewer active firms, we can see open gaps in some niches.
• Total businesses declined by 56k in 2024. Fewer competitors can mean room to win customers in 2026.
• Registered businesses fell by 13k in 2024. If you plan a new entity in 2026, study why exits rose and build buffers.
• Employer businesses decreased by 18k in 2024. In 2026, hiring plans should be careful, with cash for payroll risk.
• Non-employers shrank by 43k in 2024. Solo founders entering 2026 may focus more on stable, repeat revenue.
• SMEs employ more people than large firms in the devolved nations and the South West. If you’re based there, your 2026 growth also shapes local jobs.
• Counts by size: micro ~1.16m, small ~220k, medium ~38k employer SMEs. Most employers are still micro and small, so in 2026, peer benchmarks should match your size.
• 15% of employer SMEs are women-led. In 2026, investors and partners are watching leadership diversity more closely.
• 7% of employer SMEs are minority ethnic-led. If you’re in this group, 2026 schemes aimed at diverse founders may fit your plans.
• Only 40% grew turnover in 2023. Many firms will enter 2026 after weak years, so set targets that protect cash first.
• 1 in 3 UK adults is running or planning a business. In 2026, new entrants will keep rising, so clear customer value and trust will matter from day one.
• Top growth priorities (next 12 months): improve profit margins 42%, diversify income 34%, reduce costs or debt 33%, improve operational efficiency 20%, launch new products/services 20%, secure funding 19%, prepare for uncertainty 15%, invest in marketing 10%, invest in market research 5%. Use this as a checklist for your 2026 plan and pick two items you can act on this quarter.

Wrapping up UK small business statistics

We hope these statistics give you a clearer picture of where small businesses stand today and inspire you to take yours further. If you are looking for a way to stay organised and keep on top of customer relationships, Capsule CRM can help.

Capsule makes it simple for small businesses to manage contacts, track sales, and improve customer interactions in one place.

Sign up for your free trial of Capsule CRM today and see how it can support your business growth in 2026.