Northern Ireland Leads in External Finance Usage Among Small Businesses in 2024
In a recent report released by the British Business Bank, Northern Ireland has emerged as the top region in the UK for the use of external finance among smaller businesses in 2024. The annual Nations and Regions Tracker reveals critical insights into financial trends and perceptions within the business community across the UK.
Consistent External Finance Usage
Northern Ireland maintained a stable external finance utilization rate of 52% in 2024, showing a slight increase from 51% in 2023. Notably, businesses looking to borrow or renew financing doubled from 5% to 10%. In contrast, the overall UK average for external finance dipped slightly to 45%, stabilizing after a significant rise last year. Among the various funding types, credit cards remained the preferred financial tool for smaller enterprises.
Perceptions of the Trading Environment
Small businesses in Northern Ireland displayed a notably optimistic perspective regarding their trading environment. According to the report, there was an even split, with 50% of businesses recognizing both threats and opportunities in the market. This positive outlook is a shift from 2023, where many cited rising costs as a primary concern.
Core Debt Finance Landscape
Despite flat demand for loans and overdrafts from key lenders in 2024, Northern Ireland boasts the highest per capita usage of core debt finance in the UK. While the wider UK market saw a 33% rise in the number of loans distributed, Northern Ireland recorded no changes in volume, with a 17% decline in value from the previous year.
High Loan Concentration
Between 2022 and 2024, Northern Ireland reported a remarkable ratio of 378 loans and overdrafts granted per 10,000 smaller businesses, far exceeding the UK average of 169. Additionally, the total value of these financial applications reached an impressive £98 million, markedly higher than the national average of £29 million.
Equity Finance Trends
Although Northern Ireland experienced a stable environment for equity finance, the Belfast city region saw a slight uptick, with a 5% increase in deal numbers in 2024. However, the overall equity deal volume remained unchanged, alongside a modest 1.8% drop in investment value.
Engagement with External Finance
In 2024, Northern Ireland reported the highest proportion of small businesses expressing openness to external finance for growth. Despite this willingness, 27% of businesses indicated they felt it would be challenging to secure such financing, compared to the national average of 19%. Moreover, the region ranked second in terms of reluctance to seek third-party advice regarding external finance, with 52% of businesses indicating they would not likely pursue such guidance.
Growing Trends in Alternative Finance
Northern Ireland showcased the strongest regional adoption of leasing, hire purchase, and vehicle finance, reaching 19%, significantly eclipsing the UK average of 10%. This sector saw a notable 7% increase from 2023 to 2024, making Northern Ireland a standout region regarding this type of external finance. However, the use of grants declined by 5%, continuing a trend that has persisted since 2022.
Support from the British Business Bank
Susan Nightingale, Director Devolved Nations at the British Business Bank, commented on these findings: “It is promising to see the resilient use of external finance in Northern Ireland amidst economic challenges. Nonetheless, there is a pressing need for awareness regarding equity finance options. Effective access to diverse funding forms is crucial for local entrepreneurs to achieve their potential.”
The British Business Bank continues to contribute significantly to the growth of smaller businesses in Northern Ireland, committing £70 million to bolster creative finance options throughout the region. Their ongoing support via various initiatives, including Start-Up Loans—which saw a 31% increase in uptake in 2024—highlights their commitment to enhancing financial resources outside London.
Future Prospects
With the UK government having pledged £6.6 billion to the Bank, there are plans for expanded support programs aimed at innovation-led businesses. These initiatives, including the Regional Angels Programme, aim to unlock regional potential and strengthen Northern Ireland’s economic landscape further.
Through strategic funding and awareness campaigns, the British Business Bank is dedicated to reinforcing Northern Ireland’s business ecosystem and supporting its entrepreneurs in realizing their aspirations.
For businesses seeking funding options in 2024, this report underscores the importance of exploring different avenues, from traditional loans to equity financing, ensuring they have the resources they need to thrive in a competitive market.
