More than four in five UK small businesses missed at least one significant growth opportunity in 2025 due to a lack of finance, highlighting a persistent funding gap despite relatively strong confidence among owners.

Research from Lovey found that 81% of SMEs surveyed reported missing opportunities, suggesting many entered 2026 having deferred expansion plans or investment decisions. The study, based on 504 business owners across sectors including retail, manufacturing, hospitality and construction, pointed to a structural disconnect between ambition and access to capital.

Despite these constraints, sentiment remained resilient. Around 77% of respondents said they felt positive about their prospects for 2026, while 71% expected to seek external finance during the year.

The findings suggest that demand for growth is intact, but the ability to act is constrained. Rising costs and tax pressures were cited as key barriers, but the report identified a more complex dynamic shaping funding needs.

More than half of SMEs, around 56%, were seeking finance simply to maintain operations, driven by supplier price increases, late payments and short-term cash flow pressures. By contrast, 43% were pursuing funding to support expansion or invest in equipment, reflecting a split between businesses focused on survival and those aiming to grow.

A “squeezed middle” of firms with turnover between £500k and £1m appeared particularly vulnerable. These businesses were often too large for early-stage support but not sufficiently established to absorb financial shocks, with 74% reporting missed opportunities due to lack of funding.

The impact is also visible in hiring trends. Data from Novuna Business Finance shows that only 14% of SMEs planned to recruit new staff in early 2026, a five-year low, suggesting investment in headcount is being deferred.

Regional disparities were pronounced. In the East Midlands, 96% of SMEs reported missing opportunities, followed by Wales at 94% and London at 91%. Sector trends also varied, with hospitality businesses the most likely to seek external finance at 89%, reflecting ongoing cost pressures and shifting consumer demand.

The report highlights a broader issue in the UK lending landscape, where complex criteria, variable approval times and differing rates can act as barriers for time-constrained business owners.