The amount of borrowing planned would mark an increase of approximately one fifth compared with 2016, when small businesses borrowed on average just £34,375. As a result, should the number of businesses that borrow in 2017 be consistent with levels recorded in 2016, overall lending to SMEs could soar above £50bn this coming year.

The survey of over 1,000 SME owners and decision makers showed that, of those intending to borrow money this coming year, almost two in five intend to borrow £100,000 or more, while a quarter plan to borrow more than £250,000. As many as one in fifty small and medium-sized businesses in the UK are planning to borrow more than £1,000,000, which could total more than 100,000 businesses nationwide.

Most commonly, SME owners secured loans against their business in 2016. More than one in ten has taken a loan out against their own commercial premises and almost one in ten against their business’ equipment, while business invoices and equity stakes were used by a combined one in seven business owners in 2016.

Somewhat concerning is the fact that, of those that took out loans in 2016, more than one in ten secured their loan against their own residential property and one in twenty took out a loan against collateral belonging to friends and family. Perhaps most alarming of all, more than a quarter do not know the source of their security.

Britain’s credit culture

The statistics show that many businesses are habitual borrowers. Of those that have taken out loans in the past ten years – 30 per cent of the total asked, three in every five have taken out more than one loan and a staggering one in six has taken out five of more.

Despite this, the survey suggests that many business owners who borrow habitually are doing so sustainably. Four in five of those who have taken out five or more loans in the last ten years has a net revenue of more than £1 million, while nearly two in five has a net revenue of more than £10 million, indicating that they are using strong revenue streams to service their debts effectively.

Most encouraging of all is that most businesses have reported self-sufficiency, stating that they have no need to borrow at all. Almost two thirds did not borrow anything in 2016 and almost two thirds intend not to in 2017. More than half of small and medium-sized business owners have not taken out a single loan in the last ten years.

Anne Griffiths, Head of SME Proposition at Zurich, comments: “£50 billion in borrowed money is an enormous sum, and in uncertain times like these, businesses must make sure they have a solid business plan and support in place to service their loans while staying profitable.”

“Borrowing can often be indicative of confidence, and increased investment in talent, equipment and business premises for growth may be one of the most encouraging economic indicators of all. The business landscape appears rife with uncertainty, but SMEs have long been the building blocks of this economy and as long as they are building themselves sensibly, sustainably, with contingencies in place, then the UK can be confident in the health of its economy.”