40+ Business Loan Statistics: in Ireland and Worldwide 

The business financing world is in a period of transformation, fuelled by the cost of supply chain, inflationary pressures, and technological advancements. 

These changes are reshaping how businesses, especially SMEs, approach growth funding. While traditional business loans remain popular, more businesses are leaning towards more innovative and flexible financing solutions, like revenue based finance and invoice financing.

To help you understand the current landscape of business financing, we’ve compiled over 40 business loan statistics. We’ll focus on Ireland where possible, but we’ll also include relevant UK and US trends, as these markets often set precedents and influence global standards and practices for SMEs.

Here are five key business loan statistics: 

1. The volume of gross new lending from banks to Irish SMEs during the fourth quarter of 2022 amounted to €952 million, a 13% decrease compared to the previous year, showcasing the lowest level of new lending since the third quarter of 2021.¹
2. Forecasts expect the alternative lending market in Ireland to grow by 17.3% annually to reach US$357.2 million in 2023, with a projected increase to US$528.3 million by 2027.²
3. In the UK, the share of businesses using external finance was 33% in Q3 2022. This was a significant drop from 44% in Q3 2021 and the lowest level since the start of the pandemic in the first half of 2020.³
4. In Ireland, the small business loan sector has experienced a decline in debt levels, with a significant reduction from €27.1 billion in 2010 to €12.8 billion in 2020.⁴
5. In the UK, in 2022, a fifth (20%) of SMEs who applied for business finance had their applications rejected despite having a ‘good or excellent’ business credit score.⁵

In this article:

Where are SMEs borrowing from?
How much are SMES borrowing?
How much are SMEs paying for their business loans?
Why are SMES looking for finance?
Are businesses getting accepted for business loans? 
Is alternative business financing becoming more popular?
FAQ

Are you an SME looking for business financing in Ireland? Reach out to find out if Financefair can grow your business. 

Where are SMEs borrowing from? 

It’s probably not surprising to learn that traditional banks are the most common funders of business loans. The most recent financial reports show that: 

In Ireland:

• During Q4 2022, the gross new lending from banks to SMEs was €952 million – a 13% decrease on Q4 2021. This marks the lowest level of new borrowing since the third quarter of 2021.¹
• In 2022, there was an increase in gross total lending (including new and existing financing) to SMEs – around €4.2 billion. This is a 4.3% rise on 2021.¹

In the UK:

• 7% of SMEs had sought a business bank loan between 2019 and 2022.³
• Government grants and business credit cards were the most popular forms of business finance in this period, with 12% of SMEs using at least one from 2019-2022. It’s important to note that government grants during COVID-19 have influenced these stats.³
• According to British Business Bank research, bank loans and private lending rose in demand from 3% to 10% between 2021 and 2022.³
• Most other finance options didn’t increase in demand during this period, except for ‘loans from a director, individual, or other organisation’, which increased from 10% to 11%.⁶
• According to Statista, business bank loans and bank overdraft facilities have remained the most popular forms of financing for SMEs from 2019 to 2022.⁷

Image source: Statista⁷

In the US:

The business finance environment in the states significantly differs from the UK and Ireland. Many businesses receive loans backed by the U.S. Small Business Administration (SBA). 

These typically have lower down payments and more flexible overheads than traditional bank loans. 

• According to the data from the federal reserve (and reported by Forbes), US businesses that did opt for a traditional bank loan, 43% turned to large banks, 36% to small banks, and 23% to online lenders.⁸Image source: Forbes⁸ 

Challenger banks and digital lenders are becoming increasingly popular

There aren’t any reliable statistics on the popularity of challenger banks with SMEs in Ireland. 

• However, Statista expects the Irish digital banking market to reach a value of US$16.2bn (€15 billion) in 2024, with an annual growth rate of 10.30%. As such, we might expect to see challenger banks become a common source of business financing for Irish SMEs.⁸

In the UK:

• In 2021, digital platforms in the UK experienced sustained and increased expansion, building on the momentum gained in 2020 due to the widespread adoption of online services amidst COVID-19.⁹
• In 2022, the growth of these digital platforms slowed, and investment decreased, shifting back towards pre-pandemic funding levels.⁹
• Still, in 2022, challenger and specialist banks accounted for 55% of SME gross lending, up from 51% in 2021 and overtaking the big five banks for the second year running.³
• (The “big five” banks in the UK refer to Barclays, HSBC, Lloyds Banking Group, NatWest Group, and Standard Chartered).

In the US:

• Forbes found that 23% of small business loan applicants opted for online lenders in 2021 – an increase from 20% in 2020.⁸

How much are SMEs borrowing?

In Ireland

• It’s hard to find exact statistics on how much Irish small businesses typically borrow. But we do know that the total money owed by small businesses decreased significantly: from €27.1 billion in 2010 to €12.8 billion in 2020.⁴

In the UK

• A study by the British Business Bank noted a rise in the average loan size for SMEs from 2021 to 2022. In 2022, the median loan amount reached £14,000, marking a 40% increase from the previous year’s median of £10,000.⁶

Image source: British Business Bank⁶

• According to SME Finance Monitor, 36% of SMEs used external financing in 2022, with one-third of these businesses taking out loans exceeding £25,000. This marks a 7% decrease from 2021.¹⁰
• Only 23% of sole proprietorships (businesses without any employees) secured loans above £25,000. In contrast, 84% of larger SMEs, those with 50 to 249 employees, borrowed more than £25,000.¹⁰
• Nearly half (48%) of SMEs in the UK were categorised as permanent non-borrowers, indicating they had yet to receive current loans, nor were they expected to seek borrowing in the future.¹⁰

In the US: 

• According to Nerd Wallet, the average short-term loan from a traditional bank (and not under the SBA scheme) was $20,000, and $110,000 for a medium-term loan.²⁷

Image source: Nerd Wallet²⁷

How much are SMEs paying for business loans? 

The last few years have seen inflation increase significantly in many parts of the world, meaning that the cost that SMEs are paying for their business finance is constantly changing. 

In Ireland:

• The average interest rate on new SME loans reached 5.23% at the end of 2022, and the average interest rate on outstanding SME loans also rose to 4.47%.¹
  Image source: Central Bank of Ireland¹
• Since then, interest rates have increased. In January 2024, AIB listed a variety of business lending interest rates, including an SME Variable Business Loan rate at 5.95% and an SME Fixed Rate Loan at 7.45%​​.¹¹
  
• Meanwhile, Bank of Ireland offers unsecured business loans with a variable rate of 7.05% and secured loan variable rates at 6.05%​​.¹²

In the UK:

In the UK, the Bank of England’s (BoE) base rate is the central reference for interest rates set by the country’s central bank. This rate has experienced significant fluctuations over the past few years.

On 3 August 2023, the BoE’s base rate was adjusted to 5.25%, marking its highest level since 2008. This sharp increase from the historic low of 0.1% in 2020, during the COVID-19 pandemic, was part of a broader strategy to curb inflation that began escalating in 2021.¹³

• In 2020, the environment of low base rates led to relatively low-interest rates for business loans. At this time, the average interest rate for new business loans was around 3.44%.¹⁴
• The increase in the BoE’s base rate in August 2023 led to a rise in the interest rates for business loans, at an average of 6.97% for new business loans.¹⁴
• As of January 2024, unsecured business loan interest rates range from 6% to 15%.¹⁶

Why are SMEs looking for financing? 

In the UK

• According to a NerdWallet study of 500 senior SME decision-makers, a third of SMEs need access to business finance to survive the next six months.¹⁷
• Statista reports that in 2022, the top reason 60% of small and medium businesses (SMEs) in the UK sought external funding was for working capital. Additionally, 42% of these UK SMEs sought funding to buy fixed assets.¹⁸

Image source: Statista¹⁸ 

In the US:

• According to a Forbes survey, most US business owners spent their loans on growing their business, with 42.4% naming it as one of their top three uses. Buying equipment was the second most popular choice, mentioned by 29.4% of those surveyed. 28.6% of those surveyed mentioned that they would use the loan for marketing and advertising expenses.⁸

Image source: Forbes⁸

Are businesses getting accepted for business loans? 

There’s limited information on loan approval rates in Ireland, and the US has a significantly different loan landscape (thanks to SBA loans). 

So to understand how many businesses are getting accepted for business loans that meet their financing needs, it’s helpful to look at UK statistics.

In the UK:

• In 2022, just 64% of SMEs received the complete sum of financing they sought from their preferred provider, while an additional 12% were only approved for amounts lower than their initial request.⁹
• This represents a notable decline from the previous four years, during which more than 80% of SMEs typically received the requested amount in full.
• Sole proprietorships (businesses without employees) experienced the lowest acceptance rates, with lenders approving only 57% of their finance applications. Conversely, businesses employing between 50 and 249 individuals saw their loan applications succeed at a high rate of 98%.⁹

Due to this, we’re seeing SMEs consider more than one lender. 

• In the UK, in 2022, nearly one-third (32%) of SMEs reported considering multiple finance providers, such as online lenders, up from one in five (20%) in 2021.¹⁹ 
• The overall count of SMEs contemplating external finance sources also rose in 2022, with 91% considering at least one finance provider, an increase from 85% in the previous year.¹⁹

Image source: Finder¹⁹

Is alternative business financing becoming more popular? 

We’ve seen that challenger banks and digital lenders are becoming increasingly popular with small business owners and entrepreneurs.

But recent statistics have also shown that alternative business financing is quickly becoming a popular option for SMEs. 

Alternative business financing is anything that isn’t a typical business loan: including revenue based financing, peer-to-peer lending, and invoice financing. 

Here are some statistics on alternative business financing: 

In Ireland:

• The alternative lending market in Ireland is on an upward trajectory, with projections indicating a yearly growth of 17.3%, targeting a valuation of US$528.3 million by 2027.²

In the USA:

• Forecasts expect the alternative lending market in the United States to reach approximately $8.68 billion in transactions in 2022. It’s predicted to expand at an annual growth rate of 2.4% from 2021 to 2025.²⁰
• Globally, the alternative lending market was valued at approximately $334.28 billion in 2021, and is expected to grow at a compound annual growth rate of 4.70% between 2021 and 2025.²¹

In the UK:

• In 2023, the alternative lending market was valued at US$ 48.06 billion.²²
• Forecasts expect this to expand at a growth rate of 10.8%– increasing from US$ 39.98 billion in 2022 to US$ 72.48 billion by the end of 2027.²²

Looking for alternative business financing in Ireland? Financefair offer revenue based financing, invoice finance, and online business line of credit. Reach out to find out more. 

Revenue based finance

A common form of alternative business lending is revenue based finance.

Unlike fixed-repayment traditional loans, revenue based finance offers dynamic, growth-aligned financing based on business projections. Essentially, an SME can use their future revenue as working capital. Financefair is the only provider of revenue based finance in Ireland.

This option is popular for asset-light but revenue-steady companies like SaaS firms, who often struggle to get funding from most traditional financial institutions.²³

Worldwide: 

• The market for revenue-based financing is on a sharp upward trajectory, and is set to expand from a valuation of $1.98 billion in 2022 to $3.38 billion in 2023, marking a growth rate of 71.2% year over year. Looking ahead to 2027, forecasts suggest the market will balloon to $25.94 billion, demonstrating a steady growth rate of 66.4%.²⁴

In Ireland: 

• Financefair is the only provider of revenue based finance in Ireland. 

Peer-to-peer business lending

Peer-to-peer (P2P) business lending functions like a business loan, but the business borrows from investors through a digital platform – rather than a traditional bank. They’re often faster and easier to get than traditional loans, but come with more risk.

In the UK:

• Since 2012, the peer-to-peer business lending market in the UK has seen consistent growth, reaching a total of 4.02 billion British pounds by the year 2020.²⁴

Image source: Statista²⁴

Invoice finance:

Invoice discounting allows businesses to receive an advance on the money owed in unpaid invoices, effectively using these invoices as collateral. This method provides quick access to funds without a traditional loan, helping fill cash flow gaps and provide working capital. While there is no statistics on invoice finance in Ireland specifically, it can be helpful to look at UK trends: 

In the UK: 

• A study by Time Finance UK revealed that invoice finance is emerging as a preferred alternative financing method for many businesss. They reported that 32% of financial intermediaries expect invoice finance to become the primary mechanism for supporting cash flow.²⁵
• According to a 2022 report by UK Finance, invoice finance funding reached an average quality advance of nearly £21 billion. This is a 32% increase on 2021, which was just below £16 billion.⁹

Image source: UK finance[9]

To learn more about how invoice financing works, check out our guide. 

FAQ

How much does the average SME borrow on a business loan?

In Ireland: Specific figures on average loans for Irish SMEs aren’t readily available, but businesses are borrowing less overall. Total debt has decreased from €27.1 billion in 2010 to €12.8 billion in 2020.

In the UK: The median business loan amount for SMEs was £14,000 in 2022, up from £10,000 in 2021.

In the US: The average short-term loan from a traditional bank was $20,000, and $110,000 for a medium-term loan.²⁷ 

How much does a business loan cost an Irish SME in interest?

In Ireland, the average interest rate on new SME loans was 5.23% at the end of 2022, and the average interest rate on outstanding SME loans rose to 4.47%.[1] Interest rates have increased since then, with AIB listing various business lending interest rates, including an SME Variable Business Loan rate at 5.95% and an SME Fixed Rate Loan at 7.45% in January 2024.¹¹

What are the alternatives to business loans?

Alternatives to business loans include revenue based finance, invoice financing, and online business line of credit. The alternative lending market in Ireland is predicted to reach a value of US$357.2 million in 2023.²

What is revenue based finance?

Revenue-based finance provides funding for businesses with consistent revenue streams by aligning capital amounts with projected income. This option doesn’t require a business to have blue-chip debtors and is popular with SAAS businesses, which often receive revenue through subscriptions. 

What is invoice financing?

Invoice financing (also known as invoice discounting) allows businesses to receive an advance on the money owed to them in unpaid invoices, using these invoices as collateral. This method provides quick access to funds without needing a traditional loan, helping to provide cash flow for working capital. 

The future of business financing

While business loans will always be an important tool for growing businesses, we’re seeing a significant increase in alternative financing options, like revenue based finance and invoice financing. 

Financefair is at the forefront of this transformation in Ireland, offering innovative financing solutions tailored to the unique business needs of SMEs. We offer revenue-based finance, invoice financing, and business line of credit to Irish businesses looking to grow. 

To find out how we can support your business, fill out an application form. 

Sources

¹ https://www.centralbank.ie/docs/default-source/statistics/data-and-analysis/credit-and-banking-statistics/business-credit-and-deposits/2022q4_trends_in_sme_and_large_enterprise_credit_and_deposits.pdf?sfvrsn=8acb991d_4
² https://www.globenewswire.com/news-release/2024/01/30/2819745/0/en/Ireland-Alternative-Lending-Business-and-Investment-Opportunity-Report-2023-Market-will-Increase-from-304-6-Million-in-2022-to-Reach-528-3-Million-by-2027.html
³ https://www.british-business-bank.co.uk/wp-content/uploads/2023/02/J0189_BBB_SBFM_Report_2023_AW.pdf
⁴ https://www.oecd-ilibrary.org/sites/92f28ade-en/index.html?itemId=/content/component/92f28ade-en
⁵ https://www.nerdwallet.com/uk/business-loans/access-business-finance/
⁶ https://www.british-business-bank.co.uk/wp-content/uploads/2023/04/BBB_SMEFinanceSurveyReport_2022.pdf
⁷ https://www.statista.com/statistics/460373/sme-methods-of-finance-united-kindom/
⁸ https://www.forbes.com/advisor/business-loans/small-business-loan-statistic
⁹ https://www.ukfinance.org.uk/system/files/2023-06/Business%20Finance%20Review%202023%20Q1%20-%20FINAL.pdf
¹⁰ https://www.bva-bdrc.com/sme-finance-monitor/
¹¹ https://aib.ie/business/interest-rates/business-lending-rates
¹² https://businessbanking.bankofireland.com/credit/business-loans/business-loan/
¹³ https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2023/august-2023
¹⁴ https://www.bankofengland.co.uk/statistics/money-and-credit/2022/may-2022
¹⁵ https://www.bankofengland.co.uk/statistics/effective-interest-rates/2023/august-2023
¹⁶ https://www.money.co.uk/business/business-loans/average-business-loan-interest-rate
¹⁷ https://www.nerdwallet.com/uk/business-loans/access-business-finance/
¹⁸ https://www.statista.com/statistics/460353/sme-reasons-to-seek-external-financing-united-kindom
¹⁹ https://www.finder.com/uk/business-loan-statistics#
²⁰ https://www.leadsquared.com/industries/lending/alternative-lending/
²¹ https://www.creditsuite.com/blog/small-business-lending-statistics-and-trends/
²² https://www.fintechfutures.com/techwire/united-kingdom-alternative-lending-market-report-2023-challenger-banks-and-digital-lenders-are-recording-strong-growth-amid-the-current-macroeconomic-environment/
²³ https://blog.tbrc.info/2023/11/revenue-based-financing-market/
²⁴ https://www.globenewswire.com/news-release/2023/11/20