SMEs that access finance are 70% more likely to succeed, new research finds

• New research from Capital Economics finds that SMEs receiving a loan from a specialist lender could be 70%, or 1.7x, more likely to trade 3 years on than the national average
• Cash flow is a particularly persistent barrier to growth for microbusinesses, as almost half (48%) report having cash flow challenges in 2026, highlighting the need for this type of lending.
• The findings come as challenger and specialist lenders now account for 68% of UK SME lending, compared to 39% in 2012
• The report also finds that iwoca has supported £3.5 billion in UK GDP and over 51,600 jobs in the twelve months to January 2026

New research from Capital Economics, commissioned by SME lender iwoca, finds that small businesses receiving finance have more of a chance to build lasting, successful companies. The analysis finds iwoca’s SME customers are 70%, or 1.7x, more likely to remain trading after three years than the UK average.

According to the Companies House Business Register¹, the majority of UK SMEs fail within five years from incorporation, with other published estimates suggesting that only 10% survive after ten years.² This analysis, based on Companies House data matched against iwoca's loan book, tracks the trajectory of businesses incorporated between 2020 and 2025 (over 23,000 unique businesses). Eight in ten (80%) firms that were incorporated in 2021 and received an iwoca loan in 2022 were still on the Companies House register in 2025. This stands in stark contrast to just 46% of all UK businesses incorporated in the same year, pointing to a higher likelihood of successful business outcomes after receiving a loan.

Specialist lenders filling gap left by traditional banks

Specialist lenders like iwoca provide funding to smaller businesses that can’t get the support needed from traditional banks. Cash flow is a particularly persistent barrier to growth for these businesses, with almost half (48%) reporting to have cash flow issues in a recent quarterly survey from Intuit QuickBooks.³ 

Even where bank finance could be available in principle, speed is a problem. Traditional lenders can take more than 20 to 30 working days just to make a decision, meaning many SMEs lose commercial opportunities before receiving a response. Helping to fill this critical success gap are challenger banks, specialist banks and non-bank lenders. They now account for 68% of UK gross SME lending, a growing market share from 39% in 2012.⁴

iwoca's contribution to the UK economy

Since launching in 2012, iwoca has grown rapidly, serving an expanding share of SME finance demand. In the 12 months to January 2026, iwoca's lending supported an estimated £3.5 billion of UK GDP. In the same time frame, it supported over 51,600 jobs, an increase on last year’s by 3.5%, in addition to stimulating £1 billion in tax revenues. For every £100 of iwoca lending deployed, £230 of GDP is supported across the economy (a 2.3x multiplier).

iwoca's reach extends across the whole of the UK: 79% of SMEs funded by iwoca are based outside London, with disproportionately large impacts in the North West, East of England, West Midlands and Yorkshire and Humber.

Mark Nathan, Founder of CQD Cleaning Services, said: “Throughout our business journey, we've always used SME finance. Since starting my cleaning services company, access to finance has been absolutely crucial for our growth. I'm not surprised by the Capital Economics report results suggesting that businesses are 70% more likely to succeed if they have access to finance - that's something I've experienced firsthand.”

Christoph Rieche, CEO and co-Founder of iwoca, said: “When 99.9% of the UK’s businesses are SMEs, they act as an important proxy for broader economic health. Finance for these businesses goes a long way – iwoca’s loans have generated £13bn in GDP in under 15 years, and supported over 51,600 jobs in the UK in the last year alone. Small businesses with real potential are being held back because many can't access the finance they need at the right moment, it’s certainly not a lack of ambition. What this research shows is that when finance is delivered, businesses are much more likely to weather difficult periods and succeed over the longer term. With better financial support, SMEs tend to grow revenues, hire, build something sustainable, and contribute substantially to the economy.”

Janine Hirt, CEO of Innovate Finance, said: “Fintech SME lending was a novel disruptor over a decade ago, and today, it has grown to be necessary financial infrastructure. iwoca’s research shows what this means in practice – for hundreds of thousands of UK SMEs, specialist lenders are no longer a fringe option, but often one of the only ways to access finance reliably, grow, and keep contributing to the economy. The fact that 68% of UK SME lending now flows through challenger and specialist lenders shows that fintech players have become a mainstay of the SME lending market and a driver of growth.”

Andrew Evans, Deputy Chief Economist at Capital Economics, said: “The scale of the difference in business outcomes between iwoca customers and the wider business population is quite striking. Businesses that received an iwoca loan in their first year were 70% more likely to still be trading three years on, and the gap holds across different incorporation years and stages of company maturity. The evidence is clear: flexible, accessible lending is associated with growth beyond individual firms - and with the jobs, output and tax revenues that benefit the wider economy.”

Footnotes:

1. Capital Economics’ analysis of Companies House data, Companies register activities: statistical release 2019 to 2020, 2020/21, 2021/22, 2022/23, 2023/24, 2024/25. Available here.
2. Enterprise Research Centre, The State of Small Business Britain, 2024. Available here.
3. Intuit QuickBooks, Small Business Insights: Quarterly Survey, February 2026. Available here. 
4. British Business Bank, Small Business Finance Markets 2025/26, March 2026, pg 36. Available here.