1.5 million business owners consider propping up their businesses with personal savings With over a million UK business owners facing financial crisis, are personal savings the only lifeline? Written by Stephanie Lennox Updated on 28 July 2023 Our experts We are a team of writers, experimenters and researchers providing you with the best advice with zero bias or partiality. Written and reviewed by: Stephanie Lennox Writer 13th September 2023 update In a significant move to bolster small businesses across the United Kingdom, the UK government has allocated £1 billion through its Start Up Loans scheme.The government website also notes that successful applicants will receive free support and guidance to help write their business plans, and up to 12 months of free mentoring.To apply for a government-backed Start Up Loan of £500 to £25,000 to start or grow your business, click here. In the midst of dire financial conditions, approximately 1.5 million SMEs in the UK are contemplating dipping into their personal savings to keep their businesses afloat. A staggering 26% of small business owners also fear that they may have to close down if the outlook for their enterprises does not improve.A recent SME insights report by Simply Business, a small business insurance provider, sheds light on the challenges faced by UK small and medium-sized enterprises. The root of the problemThe findings, gathered from the responses of over 1000 small business owners, underscore the current predicaments. For business owners, the current crisis may be only survivable by raising prices (during this categorically tough period to do so for customers), going into survival mode, or deploying their own personal bail-outs.The key findings of the Simply Business report are as follows:Over a quarter (26%) of SMEs are now facing up to 40% higher monthly energy costs compared to the previous year, with some even experiencing a staggering 150% increase in energy expenses.Nearly half (48%) of SMEs consider the rising cost of living as the most prominent challenge for their businesses.Over half (52%) of SMEs expect a decrease in profits of up to 20% in 2023, with factors like customer retention (26%) and lack of funding (25%) impacting business operations.Rising energy costs at the height of SME concernRising energy costs and a lack of government support are the primary challenges cited by SME owners. A striking 26% of SMEs are now paying up to 40% more on energy each month compared to the previous year, and some report an astonishing 150% increase in monthly energy expenses.Annelise Sealy, proprietor of The Fall Bride in Hackney, east London, shared her struggles, stating: “We run everything as efficiently as possible, yet our monthly energy bill has fluctuated between £100 and £1100 over the past year, despite no changes in our operations. The Government also needs to address the issue of taxation on small businesses. A blanket increase that doesn't consider industry, business size, or turnover is neither thoughtful nor effective.”Glimmer of hopeDespite the formidable economic struggles SMEs are currently facing, a glimmer of optimism remains within the community. Over half of the surveyed businesses (54%) expressed confidence in the UK economy's potential for improvement within the current year. Additionally, 77% of respondents expressed confidence in their own business prospects for the next six months.Almost half (47%) of UK SMEs express their intention to raise prices by up to 10%, with an additional one-third (36%) planning increases of up to 20%. The ongoing cost-of-living crisis compels businesses to constantly search for ways to stay financially afloat.Alan Thomas, UK CEO at Simply Business, acknowledged the crucial role of small business owners in the UK economy, stating:“The fact that many SMEs across the UK are struggling so significantly is a serious cause for concern. Small businesses sit at the heart of our communities and are vital to our economy, and it is essential that we continue to support them in these times of financial uncertainty.”More from Startups.co.uk:The truth hurts: how lack of female funding alters the startup landscapeMPs challenge venture capital firms on female and minority-led investment ratesMajority of UK Black business owners say they don’t trust banks to support their business Share this post facebook twitter linkedin Tags News and Features Written by: Stephanie Lennox Writer Stephanie Lennox is the resident funding & finance expert at Startups: A successful startup founder in her own right, 2x bestselling author and business strategist, she covers everything from business grants and loans to venture capital and angel investing. With over 11 years of hands-on experience in the startup industry, Stephanie is passionate about how business owners can not only survive but thrive in the face of turbulent financial times and economic crises. With a background in media, publishing, finance and sales psychology, and an education at Oxford University, Stephanie has been featured on all things 'entrepreneur' in such prominent media outlets as The Bookseller, The Guardian, TimeOut, The Southbank Centre and ITV News, as well as several other national publications.