Posted: December 14, 2023 By Kieran Darmody

UK small businesses face costs 10k higher than during the same period last year

A new study by Liberis finds that UK small businesses are facing soaring operational expenses and a £22 billion funding gap, putting their growth and sustainability at risk.

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  • Liberis study reveals growing business costs endanger growth and sustainability of UK SMEs and the wider economy
  • Liberis sheds light on £22 billion SME funding gap amidst soaring operational expenses in the UK

London, 14 December 2023Liberis, a pioneer in embedded business finance solutions, revealed data showing that small businesses (SMEs) in the UK face costs £10,000 higher than they were during the same period last year.

Liberis’ analysis, utilising Open Banking data, provides a comprehensive view of the UK’s small business sector. The study underlines the resilience displayed by small businesses so far but highlights alarming trends that demand immediate attention.

According to Liberis, the average small business in the UK now confronts costs that are £10,000 higher than they were at this time last year. This staggering increase presents a substantial challenge to the growth and sustainability of these businesses.

The research also indicates that the cash buffer provided by various government-led Covid Business Interruption Loans is quickly depleting. Small businesses, which have relied on these loans to weather the storm of the pandemic, now face the harsh reality of diminishing financial support.

The average SME bank account balance has now dwindled. Liberis’ research shows a downward trend, with the average SME bank account balance dropping from £16,000 in June 2020 to £2,000 in July 2023.

“Since the onset of the COVID-19 pandemic in 2020, the UK economy has experienced one of the most significant inflationary challenges in four decades. While attention has primarily focused on the Cost of Living crisis affecting individuals and households, the escalating Cost of Doing Business has received relatively sparse coverage,” said Alex Ivison, Chief Risk Officer at Liberis.

Ivison continued: “The rise in expenses has been unevenly experienced. Our research shows that small businesses in the hospitality industry are experiencing the worst of the cost of doing business crisis. A tight labour market, higher energy costs, and rising food prices have meant these businesses’ average costs have more than doubled since 2020.” 

To make matters worse, the Bank of England reports that mainstream lenders are increasingly withdrawing credit to small businesses, further exacerbating the financial strain they face.[1]

Solving the UK’s £22 billion SME funding gap

The lack of accessible finance presents a threat to British small businesses and the UK economy. SMEs account for around half of the turnover in the UK private sector and three-fifths of employment in the UK, according to the Department for Business & Trade[2]. Despite the impact small businesses have on the UK economy, the latest figures from the Bank of England estimate that there is an SME funding gap of £22 billion in the UK.[3]

Commenting on how Liberis is leading efforts to close the UK’s funding gap, Ivison said: “We leverage Open Banking in order to more fairly provide revenue-based finance to merchants who need it. The data enables us to tailor our product to best suit their needs, which ensures we can provide much-needed financial support to underserved merchants quickly and fairly, promoting financial inclusion and empowering small businesses to thrive.”


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About Liberis

Liberis builds flexible embedded finance solutions that empower businesses and provide a positive impact. Founded in 2007, Liberis is a leading global embedded finance platform with a mission to provide small businesses with accessible and responsible finance. With over 25 global strategic partners and direct reach to more than 1.5 million small businesses, Liberis has saved or enabled over 200,000 jobs through its innovative financing solutions. For more information, visit

[1] Bank of England, Annual growth of lending to businesses

[2] Department for Business & Trade, Composition of the 2023 business population

[3] Bank of England, An open platform for SME finance

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