SMEs are set to invest and help drive forward national economic growth, writes Paragon's Managing Director of SME Lending, John Phillipou, on the publication of the new Paragon report An SME Led Recovery.

No one should doubt the resilience and forward-thinking of SMEs. After facing challenge after challenge, they are looking to the future and are set to drive economic recovery throughout the UK.

Evidence for this can be found throughout this report. Identifying plans for substantial new investment, An SME Led Recovery finds that businesses are preparing to take full advantage of the opportunities that will arise in the months and years ahead.

This is very encouraging news. Without growth in the SME sector, the wider economy cannot reach its potential. That SMEs are feeling confident, investing, and planning for the future is a positive indicator that, despite the turbulence over recent months, the economy is once again heading in the right direction. 

Featuring exclusive new research, An SME Led Recovery looks at what is behind improving SME activity. From increased spending to fresh investment, we find that SMEs are taking proactive steps to prepare their businesses for the future.

Across the last three months, more than half of SMEs surveyed (57%) sought over £100,000 in additional financing – and plans for investment is set to further increase. Over a third (34%) plan on increasing investment over the next six months, with 52% set to maintain their current spending levels.

This demonstration of confidence is also supported by expected improvements to cashflow. Rising from 45% expecting improvements in the next three months, half of SMEs expect their cashflows to have improved in six months’ time – rising to 55% across the next year.

Increased financing and cashflow is also unlocking the ability of SMEs to invest in the future of their operations.

Rising from 14% of SMEs in the previous three months investing in electric vehicles to 22% in the next three, an increasing number of businesses are recognising the benefit of updating their fleet and prepare for the phasing out of fossil fuel assets – though their ability to acquire them depends on whether supply chains can meet demand.

Further evidence of the forward-thinking of SMEs are their plans to increase their workforces. A third of businesses are set to increase their full-time staffing levels over the next six months, preparing their operations for growth in activity and ensuring they can maximise forthcoming growth opportunities.

For SMEs to be able to invest, it is essential that they are supported and have access to the funding necessary to deliver on their plans. As SME lending specialists, Paragon knows and understands the challenges they face and shares their passion for generating economic growth.

An SME Led Recovery demonstrates the huge potential for SMEs in the year ahead – and I can’t wait to work with businesses to ensure that this potential is delivered.

Visit Paragon's Asset Finance website to learn more about how our team can support your business.