New research from Swoop Funding reveals a funding divide across the UK’s SME (Small and Medium-sized Enterprise) landscape.
While major cities like London and Manchester have seen a drop in SME investment since 2023 – Manchester down 41% – some smaller towns have experienced an huge increase. Stoke-on-Trent has seen SME funding rise by 5,538%, Farnham by 4,100%, and Sunderland by 3,608%, suggesting that access to finance is shifting away from traditional urban centres.
Andrea Reynolds, CEO of Swoop, believes this funding shift could signal a new chapter for regional business growth:
“Business growth is happening across the regions and it’s testament to the fact that decentralisation is happening up and down the UK. It’s great news that businesses in smaller cities and towns are investing in their growth. Entrepreneurs shouldn’t feel they have to move to London to find success.
“I believe things will change in the next five years and there will be a greater balance. Why? Because I think that side hustles and SMEs are becoming much more achievable to more people. The internet is a huge marketplace and gives someone access to millions of potential customers from their kitchen table. The barrier to entry is lower than most people realise. I think we could be on the cusp of a golden age of entrepreneurs – if they get the right encouragement from the government.”
Common Mistakes SMEs Make When Seeking Finance
Reynolds explains that many businesses are still approaching finance the wrong way:
She adds that this isn’t always due to misconception – it’s often due to a lack of awareness: “It’s not that SMEs misunderstand what lenders want – they just don’t know what’s available. For example, there are options like HMRC’s Time to Pay scheme, or specialist lenders who offer better terms for things like corporation tax. Business owners should explore their options before jumping to a traditional loan.”
To help SMEs navigate the current market, Reynolds has shared five top tips to improve their chances of securing finance:
Five Ways to Improve Your SME Funding Success
1. Know what you’re asking for
“Tailor your application to the right funding product. Term loans aren’t one-size-fits-all, so explore alternatives like asset finance, invoice finance, or equity solutions if they better suit your needs.”
2. Get application-ready
“Lenders want to see a clear, confident business plan, realistic projections, and a solid track record (however short) when considering financing. If you need help with this then our SME finance guide is a great starting point.”
3. Strengthen your financial story
“Good credit, tidy accounts, and timely tax filings go a long way. For start-ups without trading history, personal credit may play a key role, so try to keep that squeaky clean too.”
4. Be strategic with timing
“To increase your odds of success, avoid applying during seasonal downturns or periods of cash flow strain. Instead, build up a strong financial track record and approach lenders when your books look strong.”
5. Use a platform that matches you to the right lenders
“Navigating funding options can be overwhelming, but you don’t have to do it alone. Speaking to an independent advisor or researching funding platforms can help you find the right fit faster and avoid wasting time on applications that aren’t suited to your business.”
How can SMEs be more strategic when applying for funding?
“At Swoop we recommend that you project forward and apply for funding before you need it. The best time to get funding is when you still have money in the bank.
“The other thing that businesses should be wary of is putting in funding applications that are likely to be turned down. This will damage your credit score and make it more difficult to get a good deal in the future.
“By using Swoop as your funding partner, you can structure your borrowing so that you’re not spending more than you have to and you’re solving your problems rather than kicking them down the road.”
What First-Time Borrowers Need to Know
Reynolds advises first-time applicants to approach funding with a plan:
“A first time applicant for funding should make sure they have a clear plan and borrow what they need to achieve the growth they want. If a business owner gets into the habit of cutting costs of things such as business bank accounts and foreign exchange, they can free up money so that they can borrow less. I would always recommend that first time borrowers check out start up loans because these are the best deals on the market, and make sure they borrow enough to keep them going in worst-case scenarios.”
Borrowing Products That Could Suit Your Business
Borrowing doesn’t just mean a high-street bank loan. In today’s evolving finance market, there are a wide range of tailored solutions to suit different business needs. Here are three alternatives:
Start-Up Loans
Ideal for early-stage businesses. You can borrow up to £25,000 per director and receive mentoring support to help manage and grow your business.
Merchant Cash Advance (MCA)
Perfect for businesses with variable income. Funds are borrowed at a set fee and repayments are made as a fixed percentage of each card sale.
VAT Finance
Designed for businesses with quarterly VAT bills. VAT Finance allows you to spread the cost and retain more working capital during key trading periods.
About Swoop Funding
Swoop is a business funding and savings platform enabling businesses to discover the right funding solutions across loans, equity finance and grants, and to identify and easily make savings – all in one fell swoop.
Swoop works with over 1,000 funding providers from mainstream banks, alternative lenders, venture capital funds, angel investors and grant agencies, meaning that whatever your funding requirement, Swoop has a solution that fits.
