Northern Ireland’s smaller businesses record UK’s highest use of external finance

Northern Ireland had the highest use of external finance among smaller businesses in 2024 of all the UK’s nations and regions, according to a report by the British Business Bank.

The Bank’s fifth annual Nations and Regions Tracker revealed that the use of external finance held relatively steady here at 52% in 2024 from 51% in 2023, while there was a doubling in the share of businesses planning to borrow or renew from 5% to 10%.

UK-wide the level of external finance fell by 1 percentage point in 2024 to 45%, stabilising after a sharp increase in 2023 while credit cards remain the leading external finance type with smaller businesses.

Perceived positive trading environment

When it came to perceptions around the trading environment, smaller businesses in Northern Ireland were the most positive compared to other parts of the UK with an even split perceiving that threats or opportunities were most prevalent (50%).

In 2023 these perceptions were more negative compared to the UK average with businesses citing rising costs as a concern.

High concentration of core debt finance

Meanwhile, Northern Ireland experienced flat demand for loans and overdrafts from the largest small business lenders in 2024, but average usage per capita remains the highest in the UK.

While loans and overdrafts from the largest small business finance lenders grew both in terms of the number of facilities granted (33%) and their amount (4%) in the UK as a whole, Northern Ireland saw no change in volume and a 17% decline in value between 2023 and 2024.

This was in contrast to the positive trend observed in all other UK Nations and regions, as well as the upward trend seen in Northern Ireland the previous year.

According to the tracker, Northern Ireland continues to show a relatively high concentration of core debt finance, even when accounting for the size of the local smaller business population.

Between 2022 and 2024, Northern Ireland’s ratio of loans and overdrafts approved per 10,000 smaller businesses was 378, ranking first in the UK and well above the average UK ratio of 169, while also having the highest associated value of those applications among all UK Nations and regions (£98m versus UK average of £29m).

Equity finance stable

When it came to equity finance, Northern Ireland remains underrepresented and experienced little change in deal numbers in 2024 – however, the Belfast city region saw a small increase of 5%.

There was no change in the volume of equity deals completed in 2024 relative to 2023 and only a slight decline of 1.8% in investment value. The Belfast city region was the key hub for this activity, accounting for an overwhelming majority of deals (89% on average between 2022 and 2024) and investment value (96%) across the nation.

Openess to external finance

In 2024, Northern Ireland had the highest share of smaller businesses saying they were open to using finance to grow in the UK. However, it also had a significantly higher share of smaller businesses holding this view who felt it would be difficult for them to get finance (27% versus UK average of 19%).

Further, the Nation had the second highest proportion of respondents indicating that they were not very likely or not at all likely to seek third-party advice if they needed external finance in the future (52%, after Yorkshire and The Humber with 55%).

This is notable given that previous Bank research found awareness/availability of finance options and advice were more frequently identified as barriers in Northern Ireland than in Scotland or Wales.

Growing use of leasing, hire purchase and vehicle finance

Northern Ireland reported the highest regional uptake of leasing, hire purchase, and vehicle finance at 19%, well above the UK average of 10% and significantly higher than London’s 7%.

This finance type also saw a seven-percentage point increase in Northern Ireland between 2023 and 2024 (from 12%), making Northern Ireland the only part of the UK to see a significant rise in any form of external finance.

However, this shift was accompanied by a five-percentage point decline in the use of grants (from 7% in 2023), continuing a declining trend that has been underway since 2022.

Susan Nightingale, Director Devolved Nations, British Business Bank, said: “In the face of a challenging economic environment, it is encouraging that use of external finance in Northern Ireland remains buoyant.

“However, it is clear smaller business owners in Northern Ireland continue to favour core finance products and more work to raise awareness of the benefits of equity finance needs to be done.

“If Northern Ireland’s outstanding entrepreneurs are to realise their full potential, then it is vital that they are aware of and have access to different forms of finance. This is something we are committed to at the British Business Bank.

“From 2026, the Bank’s new Cluster Champions initiative and the additional investment fund capital earmarked for innovation clusters in the recent Spending review will provide a further boost to the Belfast City Region area as part of the Bank’s focus on supporting the UK’s Modern Industrial Strategy.”

British Business Bank driving impact across the UK

The British Business Bank has continued to deliver significant support to smaller businesses across the UK through its debt and equity finance programmes, with a focus on benefitting firms outside of London. Throughout 2024/25, 84% of the Bank’s newly supported businesses were outside the capital, which is expected to result in £4.7bn in additional GVA and support around 22,100 jobs across the rest of the UK.

The Bank’s Investment Fund for Northern Ireland has committed £70m to support the growth of small and medium-sized businesses across a range of commercial finance options, deploying £18m in loans and equity investment in the 2024/25 financial year alone.

Businesses in Northern Ireland also benefitted from investment via other Bank-led programmes, such as Start-Up Loans, which experienced a 31% uptake locally in 2024 compared to the previous year.

Along with the Investment Fund for Northern Ireland, the Bank is expanding geographically focused interventions to support the UK’s Modern Industrial Strategy and unlock regional potential. In June 2025, the government committed £6.6bn to the Bank, increasing its total financial capacity to £25.6bn.

The Regional Angels Programme, which supports the work of AwakenAngels in Northern Ireland and the Republic of Ireland, has been expanded by £340m and will be combined with new support for diverse angel networks and innovation-led businesses.