One in two small businesses need funding to power growth into 2026
Ahead of the Autumn Budget, with small business owners already worried about the prospect of tax hikes, 53% of UK small business owners say they need to secure funding or finance in order to invest in growth plans for 2026. The need for finance is most acutely felt in London (65%) – the engine-room of the nation – followed by enterprises in the North East (62%), Yorkshire / Humberside (58%) and Wales (54%).
Significantly, the new data from Novuna Business Finance reveals that the need for finance correlates most strongly with businesses that are planning rapid expansion, rather than it being a desperate measure for businesses in trouble. The poll of a representative sample of 1,244 small business owners revealed that those enterprises forecasting significant expansion were more likely to need funding to power growth (71%), compared to 49% of those that were dealing with moderate contraction or decline.
The findings suggest UK small businesses are heading into the Christmas trading period facing a challenging financial double whammy – at a time when the percentage of small business owners predicting growth has fallen to a new five-year low (25%). The widespread need for finance to power future growth into 2026 coincides with 86% of small businesses simultaneously fearing the possibility of Autumn Budget announcements that would adversely derail their plans for growth. Nationally, Budget rises to National Insurance (59%), VAT (50%), income tax (50%) fuel duty (37%) and further taxes on diesel or petrol vehicles (37%) would all negatively impact growth plans, according to business owners.
The Novuna research also explored the consequences of small business owners not securing funding in the months ahead – and the growth initiatives for 2026 that would be put on indefinite hold as a result. Plans to create jobs and increase headcount would be dropped by 33% of small businesses, whilst 28% said they would mothball plans to launch new products. In addition, 25% of small businesses would scrap plans to modernise their IT capability and 24% would postpone investment in new production lines and machinery. The Novuna Business Finance research also reveals a direct impact on supply chain, with 20% of respondents saying they would not be able to pay their suppliers on time.
Jo Morris, head of insight at Novuna Business Finance comments: “There is so much talk about economic growth, but at times, there seems to be a lack of understanding on what is needed to create it. Our decade-long Business Barometer study shows clearly that the growth forecasts of UK small businesses have fallen to a five-year low for the final months of 2025. The vast majority are extremely concerned about any Autumn Budget tax hikes that few enterprises feel they can absorb – and at the very time when they are looking for funding to support growth plans; whether this be investing in new equipment, hiring people, or modernising IT capabilities. At Novuna Business Finance, we are working hard to support the small business community at a critical time – offering businesses in need of capital the ability to finance assets, an alternative that could potentially benefit their overall cash flow and ease pressure on other areas of their budget. Doing this with a flexible approach means that small businesses have the opportunity to better plan their growth. Now is a time to focus on supporting small businesses and to avoid adding any burdens that will damage their growth ambitions for 2026.”