Interestingly, twice as many companies want to borrow so they can expand their business versus those that need increased funds to keep their companies afloat (10% v 5%). The demand for borrowing for expansion points to increased confidence and underlines the positive message in Santander's Business Confidence Index, despite falling profits for twice as many businesses as those who enjoyed profit growth in the first half of the year.
Businesses with a turnover of between £1 million and £5 million are the most optimistic with more than one in ten (12%) saying they need cash for expansion while those with an annual turnover of more than £25 million are less likely to want to borrow. The research shows 7% of companies with a turnover of more than £25 million say they need cash for expansion while 4% need increased borrowing to ensure their business survives.
Analysis shows 20% of wholesale firms and 19% of construction and building services companies want extra funding for expansion while 11% of hospitality and leisure companies and 10% of travel firms feel they need additional borrowing to ensure their company survives the current economic downturn.
Overall, the majority of businesses (57%) say they are happy with their current level of borrowing while almost one in five businesses are looking to cut their debts (17%).
Steve Pateman, head of Santander Corporate Banking, said: "It's encouraging that increased confidence amongst UK businesses is feeding through to borrowing needs, and while it's arguable whether we are seeing any significant market recovery, it is striking that twice as many want to borrow to expand rather than just to survive.
"The economic downturn has focused minds and businesses have adjusted accordingly. It is up to banks to adjust as well and for the role of banking in the UK economy to be redefined. We are committed to building strong relationships based on an understanding of the business and its needs, before providing them with solutions and services that fit their individual requirements. Banks need to focus on customer relationships and taking prudent and sensible commercial risks."