The findings from the Federation of Small Businesses (FSB) quarterly small business index (SBI) also reveal that of those who apply for finance, only 43% of those applications are approved, which is also at a record low.

Only 19% of the index’s 1,200 respondents described the availability of credit as ‘good’ which is the lowest seen since 2016, with 44% of successful applicants being offered a borrowing rate of up to 4% in Q1 which is down 32 percentage points on the same period last year.   

Of the SMEs that did manage to secure finance, four in ten, 42%, planned on using the credit to manage cash flow, this is double the number, 21%, that plans to use the funds to update their equipment, over double, 19% that plans to use it for an expansion and ten times as many, 4%, who will use it for recruitment.