The UK Industries Most Reliant on External Finance
Transport and storage has been named the UK industry most reliant on external finance, with more than eight in ten SME employers using some form of borrowing, credit or other external funding.
New analysis of the Government’s Small Business Survey 2025 shows that 84% of SME employers in transport and storage use external finance, ahead of primary industries at 81%, manufacturing at 79% and construction at 77%.
Across all UK SME employers, 70% were using some form of external finance in 2025.
The findings come from the latest Longitudinal Small Business Survey 2025, published by the Department for Business, Innovation, Science and Trade on 15 October 2026.
The industries most reliant on external finance
| Industry | SME employers using external finance |
|---|---|
| Transport and storage | 84% |
| Primary industries | 81% |
| Manufacturing | 79% |
| Construction | 77% |
| Retail and wholesale | 75% |
| UK SME average | 70% |
| Accommodation and food | 65% |
| Other services | 64% |
| Professional and scientific | 63% |
| Health | 62% |
| Finance and real estate | 57% |
Source: Department for Business, Innovation, Science and Trade, Small Business Survey 2025.
The figures suggest a clear divide between industries.
Businesses operating vehicles, machinery, stock or other physical assets are among the most likely to use external finance, while service-led industries such as professional and scientific activities are considerably less likely to do so.
That does not necessarily mean that businesses in finance-heavy industries are experiencing financial difficulties.
External finance can be used to fund growth, purchase assets, manage working capital or spread large capital costs over a longer period rather than paying for them entirely from existing cash reserves.
Different industries are financing themselves in very different ways
The Government survey also shows that the type of finance used varies substantially between sectors.
Transport and storage businesses were among the heaviest users of several products. Some 48% used business credit cards, 41% used leasing or hire purchase and 36% used bank overdrafts.
Primary industries showed a different pattern, with 48% using overdrafts, 46% using bank loans and 44% using leasing or hire purchase.
Manufacturing SMEs were also relatively finance-intensive:
| Finance type | Manufacturing | Transport & storage | Construction |
|---|---|---|---|
| Credit cards | 46% | 48% | 47% |
| Leasing / hire purchase | 35% | 41% | 33% |
| Bank overdrafts | 32% | 36% | 30% |
| Bank loans | 29% | — | — |
| Factoring / invoice discounting | 8% | 6% | — |
Source: Small Business Survey 2025. Figures shown where highlighted by the Government’s published sector analysis.
The figures demonstrate why there is no single form of business finance suitable for every industry.
A transport company purchasing vehicles may have very different requirements from a manufacturer financing machinery or a construction company managing the gap between paying labour and materials and receiving payment from a customer.
The typical SME seeks £50,000
The survey also provides a useful indication of how much funding SMEs are actually looking for.
Among businesses that sought external finance during the previous 12 months, the median amount requested was £50,000.
However, requirements increased sharply with business size.
| Business size | Median finance sought |
|---|---|
| Micro business | £40,000 |
| Small business | £100,000 |
| Medium-sized business | £650,000 |
| All SME employers | £50,000 |
The Government also reported a mean funding requirement of £481,000, although it warns that this figure is heavily influenced by a relatively small number of larger applications. The median therefore gives a better indication of the requirement of a typical SME.
Interestingly, the £50,000 median was identical across England, Scotland, Wales and Northern Ireland.
Business loans and overdrafts remain the most sought-after funding
Among SMEs that had applied for external finance during the previous year, 39% sought a bank loan.
The same proportion sought a bank overdraft.
Leasing and hire purchase were sought by 22%, while 16% applied for a business credit card.
| Type of finance sought | Share of applicants |
|---|---|
| Bank loan | 39% |
| Bank overdraft | 39% |
| Leasing / hire purchase | 22% |
| Credit card | 16% |
| Director / business partner loan | 13% |
| Government or local authority scheme | 12% |
| Family / friend loan | 12% |
| Commercial mortgage | 6% |
| Peer-to-peer loan | 5% |
| Factoring / invoice discounting | 2% |
| Equity finance | 2% |
Overall, 15% of SME employers had actively sought new external finance during the previous 12 months.
Demand increased with business size. Some 13% of micro businesses sought finance, compared with 19% of small businesses and 23% of medium-sized businesses.
Primary industries recorded the greatest demand, with 30% seeking finance during the year, followed by transport and storage at 18%. Construction, administration and arts and entertainment each recorded 17%.
Most businesses applying for finance have borrowed before
One of the more striking findings is how few applicants were entering the finance market for the first time.
Only 16% of SMEs that sought finance during the previous 12 months were first-time applicants.
That was down substantially from 23% in both 2024 and 2023.
In contrast, 83% of businesses seeking finance had previously applied for external funding.
Previous experience was particularly common in transport and storage, where 99% of applicants had sought finance before. The figure was 92% in administration and 89% in manufacturing.
This suggests that, for many businesses, external finance is not simply an emergency measure. It forms an ongoing part of how businesses fund assets, working capital and investment.
Finance-heavy industries are also facing renewed cost pressure
The latest economic data help explain why access to working capital may remain particularly important in some of these sectors.
On 22 October 2026, the Office for National Statistics reported that raw material prices were affecting turnover for 25% of trading businesses, up eight percentage points compared with October 2025.
The impact was considerably greater in some of the sectors with the highest use of external finance.
Raw material prices were reported as a turnover challenge by 46% of construction businesses and 39% of manufacturers. The latest ONS Business Insights and Conditions Survey can be viewed here.
Transport businesses are facing a different pressure.
Earlier in October, the ONS found that 73% of UK businesses expressed some concern about rising fuel prices. Within transport and storage, 60% said they were very concerned about fuel prices, the highest proportion of any industry. ONS Business Insights and Conditions Survey, 8 October 2026.
For businesses required to pay for stock, fuel, machinery, vehicles, wages or materials before receiving revenue from customers, changes in operating costs can quickly increase the amount of working capital required.
Choosing finance that matches the requirement
The latest figures demonstrate that external finance is already a normal part of operating for the majority of UK SME employers.
However, the appropriate form of finance depends heavily on what the business is trying to achieve.
A vehicle or machinery purchase may be suited to asset finance, while a business regularly waiting for customers to settle invoices may consider invoice finance.
Businesses requiring additional working capital or funding for a specific growth project may instead consider revolving facilities or business loans.
Businesses exploring borrowing can also review fast and affordable business loan options through British Business Funding. British Business Funding is a finance brokerage, not a lender. Finance is subject to lender approval, eligibility and individual terms, and businesses should ensure repayments are affordable before entering into an agreement.
John Carter, Managing Director of British Business Funding, said:
“The differences between industries are significant because they show that business finance is not simply about whether a company needs to borrow. It is also about what that business needs to finance.
“A transport company might be funding vehicles and fuel while a manufacturer needs machinery, materials and enough working capital to cover the period between production and getting paid.
“The fact that more than eight in ten SMEs in some sectors already use external finance shows how embedded funding has become in normal business operations.
“What matters is matching the facility to the requirement. Using a short-term product to fund a long-term asset, for example, can put unnecessary pressure on cash flow even when the underlying investment makes commercial sense.
“Businesses should look at how quickly an investment is expected to generate revenue, how predictable their cash flow is and how comfortably repayments can be serviced before deciding which form of finance is appropriate.”
Methodology
British Business Funding analysed the Department for Business, Innovation, Science and Trade’s Longitudinal Small Business Survey 2025, published on 15 October 2026.
The complete survey interviewed 10,481 UK business owners and senior managers between 27 October 2025 and 30 April 2026. The SME employer analysis used responses from 8,022 businesses with between one and 249 employees.
External finance includes products such as credit cards, overdrafts, bank and other financial-institution loans, leasing and hire purchase, commercial mortgages, director loans, invoice finance and other forms of business funding.
Sector figures use the Government’s SIC 2007 industry groupings. The primary category includes agriculture, forestry and fishing, mining and quarrying, electricity and gas, and water, sewerage and waste management.
The ONS business-condition statistics cited in the article are separate, more recent surveys and are included to provide context around current trading conditions rather than as part of the finance ranking.