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As the UK’s economic recovery from Covid gains momentum, access to finance is the key factor in helping the small business sector build back and support growth in to the New Year, according to research by Hitachi Capital Business Finance. Its Business Barometer study found almost half of small businesses (49%) are relying on securing finance to help them fulfil their growth plans for the year ahead. This comes after three consecutive quarters when small business outlook has remained unchanged, with 34% of business owners predicting growth.

The quarterly poll of over 1,200 small business owners identified job creation as the most pressing issue where finance was needed. Significantly, at a time when some sectors are facing labour shortages, the research found 30% of small businesses reported their plans to invest in job creation for skilled labour are dependent on the enterprise securing finance first.

This pressure was most pronounced in the manufacturing sector (51%) and IT/ telecoms (34%). Regionally, small businesses in London were most likely to say they would need to secure funding before they could move forward with hiring plans (41%).

In addition, a quarter (25%) of enterprises said they would struggle to launch new products and services without first securing finance. Innovation and diversification are important as businesses look for new ways to rebuild and recover, but small businesses in retail (46%), manufacturing (29%) and IT & telecoms (29%) said they risked being held back if they were unable to securing finance.

The Barometer results also highlighted the important role finance plays in helping small businesses to reach new customers. More than one in five small businesses (24%) said that without access to finance they would not be able to move forward with new marketing and advertising campaigns. Furthermore, almost a third of small businesses (31%) who have said they already have a broad-based international offering across many countries (including and beyond the EU) said advertorial and marketing would be impossible without securing finance (compared to 22% of business with only UK based customers).

With many businesses planning to return to the workplace, the Hitachi Capital survey revealed that one in five small businesses (22%) say they needed funding to invest in new vehicles as well as move to a better or bigger office location.

Joanna Morris, head of insight at Hitachi Capital Business Finance, commented: “We are at a critical moment when it comes to supporting the small business community and their crucial contribution to the economy at large. Over the last three quarters, our Business Barometer study has seen small business confidence rise and stabilise. However, the research clearly shows that small businesses are in need of funding to rebuild after a challenging year. They have already begun to plan and prioritise what resources and investment they will need in order to grow into the beginning of 2021 - and without proper support some may struggle to find their feet again.”

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