Business loans
Business loans and SME survival: behind the 70% figure
Can access to business finance help a small company stay in business? Research published in June 2026 found a substantial survival gap between one specialist lender’s customers and comparable Companies House cohorts. Here is what the findings tell us—and what they cannot tell you about whether your own business should borrow.
Quick answer
Capital Economics, in research commissioned by iwoca, reported that one cohort of the lender’s customers was around 70% more likely to remain on the Companies House register three years after funding than the comparison population. That is an association, not proof that a business loan causes better survival. Your borrowing decision still depends on the purpose, cost, repayment schedule and risks of the actual offer.
Key points
- The headline comes from research on iwoca customers, not a trial of all UK business loans or Shareholder customers.
- Around 80% of the highlighted funded cohort remained on the register, compared with around 46% of the comparison cohort.
- A 70% relative difference does not mean a 70-percentage-point improvement or a guaranteed outcome.
- Working-capital finance can address a temporary cash gap, but borrowing cannot by itself repair an unviable business model.
- Compare total repayments, fees, security and guarantees—not just speed or the advertised rate.
What did the business-loan survival research find?
The June 2026 report, Impact of non-bank lending on SME success rates, was researched and authored by Capital Economics and commissioned by SME lender iwoca. Its methodology describes a sample of 23,001 unique customer IDs for businesses incorporated between 2020 and 2025, matched to Companies House information. The study grouped firms by incorporation year and the timing of their funding.
The headline example concerns businesses incorporated in 2021 that received an iwoca loan in 2022. Around 80% remained on the Companies House register in 2025. The comparator was businesses incorporated in 2021 that were also still on the register in 2022; around 46% of that group remained in 2025. Matching the starting point matters: this was not simply a comparison with every business formed in 2021 regardless of whether it survived to 2022.
The report found higher survival rates for the funded groups across the incorporation and funding-year combinations it analysed. It defines success using continued presence on the effective business register and specified failure-related notices. That is a useful indicator, but it is not the same thing as measuring profitability, customer satisfaction or the return generated by each individual loan.
| Group | Share remaining on the register in 2025 |
|---|---|
| iwoca customers funded in 2022 | Around 80% |
| Wider cohort still on the register in 2022 | Around 46% |
Sources:Capital Economics, commissioned by iwoca, Impact of non-bank lending on SME success rates, June 2026iwoca, SMEs that access finance are 70% more likely to succeed, 15 June 2026
What does “70% more likely” actually mean?
The headline describes a relative comparison. Using the rounded percentages in the report, 80 divided by 46 is approximately 1.74: the funded cohort’s survival rate was roughly 1.7 times the comparator’s. Subtracting the two percentages instead gives a difference of about 34 percentage points. These are different ways of describing the same comparison, not interchangeable measures.
Neither calculation predicts your company’s survival probability. A business owner cannot take a starting probability, add 70 points and assume that borrowing will produce the result. Nor does the finding show that all lenders, sectors, loan sizes or economic periods will have the same relationship. It is evidence about the observed groups and dates in the research.
For decision-making, the useful question is therefore narrower than the headline: could a suitable, affordable facility help this particular business overcome an identifiable constraint? The answer needs a cash-flow forecast and a written offer, not a survival statistic alone.
Sources:Capital Economics, commissioned by iwoca, Impact of non-bank lending on SME success rates, June 2026
Why the findings do not prove that borrowing causes survival
The report explicitly describes its comparison as descriptive rather than causal. It is not a randomised experiment assigning otherwise identical firms to receive or not receive a loan. Companies applying for and obtaining finance may differ from other companies in their trading activity, management, growth plans, creditworthiness or access to advice.
Capital Economics adjusted for incorporation year and the time a business had already operated before funding. Those adjustments improve the relevance of the comparison, but they do not remove every possible difference between the groups. The wider comparison population can also include companies using other finance: it should not be described as a clean group of businesses that never borrowed.
The commissioner is relevant too. iwoca paid for the research, while the report states that Capital Economics independently researched and authored it. We identify both organisations so readers can judge the evidence in context. The findings should not be presented as a Shareholder outcome, an endorsement of a particular supplier, or a promise about a new application.
Sources:Capital Economics, commissioned by iwoca, Impact of non-bank lending on SME success rates, June 2026
How business finance can support cash flow and growth
A profitable business can still run short of available cash. Wages, rent, tax and suppliers may need paying before an invoice is settled or seasonal stock is sold. Where that gap is temporary and future receipts are credible, suitable finance can help align outgoing payments with incoming money. The forecast needs to include the repayments as well as the original shortfall.
Investment is a different use case. A company might need equipment to fulfil a signed contract, stock for a predictable peak, or additional capacity to serve existing demand. Borrowing can bring that spending forward, but extra revenue is not automatic. Model the contribution after purchase costs, staffing, overheads and debt service, including what happens if the expected demand arrives late.
Resilience also involves actions that do not require a loan: collecting overdue invoices, agreeing appropriate customer deposits, reviewing purchasing commitments and building a cash reserve where possible. Finance may complement those measures. Using debt repeatedly to cover a permanent loss can instead increase pressure and leave less flexibility when the next problem appears.
Read next:Build a cash-flow forecastPlan a business cash reserve
Sources:British Business Bank, Getting your business ready for finance
Where alternative lenders fit in UK business finance
High-street banks are not the only source of small business loans. The British Business Bank’s March 2026 market publication reports that challenger and specialist banks accounted for 60% of gross SME bank lending, excluding overdrafts, in 2025. Including non-bank lenders, the combined share was 68% of overall SME lending.
Those figures describe different markets. The same publication compares the 60% bank-lending share with 39% in 2012; it does not establish that the broader 68% measure rose from that same 39% baseline. Keeping the definitions separate avoids overstating what has changed.
More provider choice does not make every offer suitable. A specialist lender may use a different application process or risk appetite, while its pricing, guarantees and repayment frequency may also differ. If you are looking for fast business loans, distinguish an initial indication from a completed credit decision and the release of usable funds. No general market statistic guarantees same-day approval.
Sources:British Business Bank, Smaller business lending markets showing signs of improvement, 17 March 2026
Which type of business funding suits the problem?
Start with the cash requirement rather than choosing a product because its name sounds convenient. A one-off purchase, an unpaid invoice and recurring seasonal swings create different funding needs. Not every form of business finance is a conventional term loan, and the documents determine how each facility works.
Use the options below as a comparison starting point, not a suitability recommendation. Availability depends on the provider and business. For unsecured business loans in particular, distinguish the absence of specified asset security from the separate possibility of a director’s personal guarantee.
| Funding option | Potential purpose | Important check |
|---|---|---|
| Unsecured business loan | A defined working-capital or investment requirement | Total cost, repayment dates and any personal guarantee |
| Secured business loan | Borrowing supported by eligible assets | Assets at risk, valuation costs and security terms |
| Revolving credit facility | Repeated short-term cash needs | Drawdown charges, commitment fees and review conditions |
| Invoice finance | Cash tied up in eligible customer invoices | Advance rate, fees, recourse and customer involvement |
| Merchant cash advance | Funding linked to qualifying card sales | Total purchased amount, deductions and contractual obligations |
| Asset finance | Vehicles, machinery or equipment | Ownership, deposit, final payment and repossession terms |
Read next:Compare business loan structuresUnderstand unsecured business loans
Sources:British Business Bank, A guide to personal guarantees for business borrowing
A worked example: can repayments survive a quieter month?
Consider a fictional company borrowing £30,000 for stock. For a deliberately simplified illustration, assume the agreed total repayment is £31,500 in 12 equal monthly instalments, with no separate fees or deductions. The monthly commitment is £2,625. This is not a lender quote, an APR calculation or a claim about available business-loan rates.
Suppose the company forecasts £3,500 a month of cash available after ordinary operating costs, tax and existing debt commitments, but before the new loan payment. Paying £2,625 leaves £875 of headroom. If that available cash falls by 25%, it becomes £2,625 and the headroom disappears. A profitable stock purchase could still produce an immediate cash squeeze if customers pay later than planned.
This example does not establish a universal affordability threshold. It shows why the timing and reliability of receipts matter alongside the headline cost. Build your own downside case, include repayment dates and existing facilities, and ask how much usable cash remains after any upfront deductions. A longer term might reduce each instalment while increasing the overall cost.
| Measure | Expected case | 25% less available cash |
|---|---|---|
| Cash available before the new repayment | £3,500 | £2,625 |
| New loan repayment | £2,625 | £2,625 |
| Remaining cash headroom | £875 | £0 |
Read next:Assess business-loan affordability
Compare the full cost and the risk to directors
Ask each provider for the amount you will actually receive, the repayment schedule and the total amount repayable. Check arrangement fees, charges linked to drawdown or account use, late-payment provisions and the early-settlement calculation. A lower advertised rate does not necessarily mean a cheaper facility once fees and the borrowing period are included.
With a variable-rate business loan, test whether payments remain manageable if the rate changes. With a fixed-cost facility, establish how much is still owed if you settle early. Repayment flexibility has to be written into the agreement; it cannot safely be inferred from a fast application process or a marketing headline.
A personal guarantee may make a director personally liable if the company cannot repay, subject to its wording. An unsecured business loan is therefore not automatically free of personal risk. Ask whether the guarantee is limited, continuing or linked to other obligations, and obtain independent legal advice where appropriate. The survival research does not reduce those contractual responsibilities.
Borrowing solely to create a credit history is not a good substitute for a funding purpose. Timely repayments may contribute to a credit profile where the lender reports them, but reporting practices and future assessments vary. Taking on interest and guarantee exposure does not guarantee easier or cheaper finance next time.
Sources:British Business Bank, A guide to personal guarantees for business borrowingBritish Business Bank, Getting your business ready for finance
Prepare a finance case—and know when not to borrow
Set out the funding purpose, required amount, timing and repayment source in plain language. Assemble current accounts or management information, bank statements, details of existing borrowing and a cash-flow forecast. The documents requested will depend on the lender, but a consistent explanation makes offers easier to assess and questions easier to answer.
Compare the expected case with a downside case covering slower sales, delayed customer payments or higher costs. Check which approvals, valuations or legal steps stand between an application and drawdown. If speed matters, ask the provider what is genuinely achievable for your circumstances rather than treating an instant business-loan headline as a funding commitment.
If there is no credible route to repayment, pause before adding debt. A business unable to meet debts as they fall due may need prompt professional advice. Renegotiating payment timing, reducing an investment, improving collections or exploring non-debt funding may be more appropriate than another loan. The research supports considering access to finance—not borrowing regardless of circumstances.
Read next:Prepare a business finance case
Sources:British Business Bank, Getting your business ready for finance
Common questions
- Do business loans make SMEs 70% more likely to survive?
- The headline refers to a descriptive comparison of iwoca customers with Companies House cohorts in a Capital Economics report commissioned by iwoca. It does not prove that taking any business loan increases an individual company’s survival chances by 70%.
- What is the difference between 70% more likely and 70 percentage points?
- The former is a relative comparison. Around 80% compared with around 46% is approximately 1.7 times the survival rate, but a gap of about 34 percentage points. Neither measure is a personal prediction.
- Can a new UK business get a business loan?
- Some providers offer finance to younger businesses, but trading-history requirements vary. Lenders may assess turnover, bank activity, the business plan, existing commitments and relevant credit information. Incorporation or a Companies House match alone does not establish eligibility.
- Are unsecured business loans safer for company directors?
- Not necessarily. Even where no specified business asset secures the loan, a personal guarantee can create personal exposure. Compare the actual agreement and obtain independent advice on the guarantee rather than assuming unsecured means risk-free.
- How quickly can business-loan funds arrive?
- Timing depends on the lender, documents, checks, security and payment process. An initial online response is not necessarily final approval or cleared funds. Ask the provider to distinguish the stages and confirm outstanding conditions.
- Will comparing business finance affect a credit score?
- Selecting a Companies House record is not a credit check. A provider may perform separate business or personal credit checks later. Ask whether each check is soft or hard, whose file it affects and when it takes place; do not assume every enquiry and application uses the same process.
Sources
Sources were checked on 19 October 2026. A source check confirms what these publications said on that date; it is not a financial review of any product.
- Impact of non-bank lending on SME success rates, June 2026 — Capital Economics, commissioned by iwoca
- SMEs that access finance are 70% more likely to succeed, 15 June 2026 — iwoca
- Smaller business lending markets showing signs of improvement, 17 March 2026 — British Business Bank
- Getting your business ready for finance — British Business Bank
- A guide to personal guarantees for business borrowing — British Business Bank