The New Lease of Life Report taps into SME sentiments around growth and the real challenges that are holding UK businesses back, together with attitudes to leasing and asset finance in terms of the potential growth opportunities it presents.

 

Equipped for growth?

Despite the impact of the cost-of-living crisis, fluctuating interest rates and banks’ lending appetites, the report found SME decision-makers tapping into a renewed sense of ambition for their businesses, with over half (51%) of SMEs being optimistic about their growth prospects over the next 12 months. One third (33%) of SMEs felt pessimistic.

When asked to identify the key challenges potentially holding back growth, the SMEs surveyed identified these as:

  • Energy costs (73%)
  • Less or unpredictable customer demand (70%)
  • Access to finance (69%)
  • Cash flow issues (67%)
  • Commercial rent / rate increases (62%)

Elsewhere, the New Lease of Life Report found that nearly two-thirds (69%) of businesses say access to finance is currently holding their business back, with 87% of SMEs saying that at least one business area that has suffered or stagnated over the last 12 months specifically because of a lack of investment due to financing or cashflow, including hiring staff (33%), expanding into new markets (29%), marketing (28%), investment in training (25%) and launching new products / services (22%).

Despite this sense of frustration, 81% of SMEs say they are keen to get back on track with their business over the next 12 months.

Over half of SME business equipment is sub-optimal

The New Lease of Life Report also found that over half (53%) of the UK’s SMEs are currently using sub-par equipment in their day-to-day. Within this figure, 17% doesn’t work or is no longer used, while 36% is adequate but not optimal and could do with upgrading.  This means SMEs are looking to achieve their growth ambitions with equipment no longer fit for purpose, and unable to support their people, products or productivity.

Despite this, Grenke’s report finds SME leaders and decision makers recognise the positive impact that being truly equipped for growth could have on their businesses:

  • 75% of SMEs said new equipment would help re-energise their business and support future growth plans
  • 81% say their employees feel better and do better at work when they have the best equipment to do their jobs
  • 70% agree leasing would help them to unlock growth opportunities

 

The leasing opportunity gap

The New Lease of Life Report shows that UK attitudes and behaviours around leasing have yet to catch up with the opportunity it presents to the UK SME market, when compared to other forms of finance; just under half (44%) of SMEs currently lease business equipment.

When asked what their preferred source of finance would be if they needed equipment in the next three months, 40% said a business loan, 20% said credit card, with 13% saying leasing.  Other sources included bank overdraft (9%), grants (9%), and peer-to-peer lending (9%).  

Businesses are also clear as to the business benefits offered by leasing. When asked what the most compelling benefits of leasing to their business would be:

  • 40% said leasing would help cashflow
  • 38% cited improved productivity
  • 34% cited reduced operational costs

Despite apparent barriers to a greater leasing uptake in the UK SME mindset, 66% agree leasing equipment is the smart choice in today’s economy.

Commenting on the New Lease of Life Report, David Horton, UK MD of Sales, Grenke, said, “Grenke is committed to empowering SME growth in the UK, and make leasing solutions more accessible and adaptive to the current business environment.

“This report shows just how ambitious the UK’s SME economy is. But we need to think about growth in a new way to achieve this. What’s the cost of not investing? Can your business afford to by-pass the competitive advantage that leasing offers, to constantly be playing catch-up in your market? How do we close the gap between the appetite and recognition for leasing opportunities and the reality of adoption?

“We know that leasing offers benefits that go beyond the financial, giving you a new way to unlock your SME’s potential and transform your business. We hope the New Lease of Life Report shows more SMEs there’s a new way to think about the growth.”

 

Methodology
The research for the Lease of Life Report is based on online interviews with 500 business leaders in UK SMEs (with less than 250 employees) who have responsibility or influence on financing decisions.  Fieldwork was conducted during July and August 2024.  The research was designed and managed by Insight Avenue, a specialist B2B research consultancy based in Windsor, UK.