Economic uncertainty, increasing operating costs and staff shortages – these are the challenges small and medium sized enterprise (SME) owners across the UK are grappling with today. Financial aid is a critical lifeline at times like these, yet so many business owners are being left empty handed. Why?

Complex application processes and delays in providing access to funds present barriers for newer and smaller businesses. Fortunately, fintech solutions, such as PayPal Working Capital, offer an alternative for SMEs unable to access vital funding through traditional means.

The cashflow challenge for SMEs

In the UK, 99% of all businesses are classed as SMEs, employing about 61% of the private sector workforce.[1] Despite playing a critical role in the health of the UK economy, many of these businesses are struggling to access vital financial support when they need it the most. Traditional lenders are becoming increasingly inaccessible for smaller businesses, as the success rate of SME applications for bank loans has dropped significantly, from 80% in 2018 to around 50% in 2023.[2]

That’s why many small businesses are looking to find support elsewhere, so they can continue to grow in a challenging economic climate. Nearly half (47%) of UK small businesses plan to expand within the next one to two years, according to PayPal’s 2024 Business of Change Report.[3] As a result, demand for alternative funding options is likely to see a boost in the near-term.

Alternative funding options for small businesses

To meet that demand, fintech companies are providing the solutions small businesses need, offering flexible and agile funding. These offerings help to enable businesses to access necessary capital to invest in new products, scale operations, or navigate seasonal shifts in demand. These providers are using digital tools and data insights to make capital more immediately accessible and adaptable to the needs of modern businesses. 

In the case of PayPal Working Capital, for example, business owners can use their PayPal sales history to secure funding, presenting less barriers to entry when it comes to the application process. This streamlined process often allows businesses to access funds just minutes after being approved. Further, PayPal Working Capital allows SMEs to borrow up to 35% of their annual PayPal sales and can make this calculation quickly based on their PayPal sales data. This means SMEs aren’t required to pitch the strength of their business. Instead, they receive an offer based on their established sales history, making it a simple and  efficient funding avenue.

Moreover, with PayPal Working Capital small businesses choose the percentage of their PayPal sales that will go toward repaying the cash advance so it can be tailored to suit the business’ cash flow needs. Repayments are tied to daily sales, which means businesses pay more when they have high sales and less during slower periods. With a single fixed fee business owners are freed from ongoing interest and have a clear view of total repayment costs, meaning no unwelcome surprises.

Powering growth for businesses across the UK

Since its introduction in 2014, PayPal Working Capital has delivered £2.5 billion in funding to 58,000 businesses across the UK.  London businesses, for example, have received over £222 million in funding, while Manchester, Birmingham, Glasgow, and Leeds have seen injections of £71 million, £40 million, £34 million, and £24 million, respectively[4].

These numbers represent more than just capital, they translate into a measurable impact on businesses up and down the country. According to a recent survey, 91% of businesses that leveraged PayPal Working Capital reported stable or increased revenue following their funding.[5] Parcours was one of those businesses. Specialising in manufacturing high-performance bike wheels, the company sought additional financial support through PayPal Working Capital. “The main use of PayPal Working Capital has been to increase our stock position,” Dov Tate, Founder and Managing Director of Parcours explains, “one of the really great things we’ve found about it is that the funds are deposited fast and are ready to deploy on our next stock order.”

As the UK economy gets back on its feet, SMEs will play a critical role in the country’s continued growth and prosperity. Fintech funding solutions, like PayPal Working Capital, are helping to minimise hurdles and providing the flexible, agile funding needed to drive small business growth in the UK.

Discover more information about PayPal Working Capital and empower the expansion of your business.

Any information provided is general only and does not take into account your objectives, financial situation or needs.

See also:

Small business startup funding: Startup funding for any small business can be a minefield. Here’s a guide to the options available to get you through those early days

[1] Startups.co.uk’s Small Business Statistics 2024

[2] Impact Investing Institute (SMEF0056)

[3] PayPal’s 2024 Business of Change Report

[4] PayPal Working Capital internal data 10/2014 to 08/2024

[5] PayPal Working Capital SMB Customer Survey – July 2024