iwoca SME Expert Index: Cutting taxes is key to SME growth, say finance brokers

• Lower taxes is the top choice by finance brokers to drive SME growth in 2025 (38%) — twice as many as the next most popular measure of business rates reform (19%).
• Meanwhile, nearly 70% of finance brokers say conditions for SMEs have worsened since the Labour Government took office.
• Rising business costs remain the top concern, cited by 53% of brokers — an 11-point increase from last quarter. 
• Optimism has improved this quarter, but 51% of brokers report that SMEs are still concerned  about a potential recession. 

More than a third (38%) of finance brokers say lower taxes are needed to boost SME growth this year, according to iwoca’s latest SME Expert Index. This is double the next choice of reforming business rates (19%).

Economic worries

With almost three-quarters (70%) of finance brokers saying conditions for SMEs have worsened since the Labour Government took office, there continues to be anxiety felt amongst small business owners. Increased business running costs for SMEs remain the biggest concern for more than half of finance brokers (53%), up 11-points on the previous quarter. 

Concerns over inflation remain high — with two-thirds (67%) of finance brokers believing inflation will be above the Bank of England’s 2%  target by the end of the year, with 32% predicting it will top 2.6%.

Uncertain economic outlook

However, despite continued concerns about barriers to growth, economic optimism bounced back in the last quarter of 2024, with almost half of SME finance brokers (46%) reporting feeling optimistic about SMEs’ future in 2025, compared to 36% in the previous quarter. Following a sharp decline after the Budget, this signals a glimmer of hope for the year ahead, as pessimism has gone down.

Worries persist about a recession, as more than half (51%) are concerned about the possibility - a slight increase on last quarter.

‍Colin Goldstein, Chief Commercial Officer, UK at iwoca, commented: “SMEs are facing rising costs and tougher borrowing conditions, yet they remain vital to the UK economy. With high street banks pulling back, businesses are turning to alternative lenders like iwoca to access the funding they need. We’re making it faster and easier for SMEs to secure finance—helping them navigate uncertainty and drive growth in 2025.”