The Big Business of Small Business
The overwhelming majority of firms in industrialised countries are small and medium-sized enterprises (SMEs). Together, they are responsible for 60 percent of all jobs, and almost the same proportion of the billions in GDP that these countries generate.
Historically, small businesses have depended on traditional banks for access to the credit they need to survive and flourish. But this has served them poorly since the financial crash. As a result, small businesses are increasingly using FinTech.
As part of UK FinTech week 2019, Oxford Economics is publishing a report, in partnership with Funding Circle, on the financial conditions facing small businesses in each of the online platform’s four markets: the UK, US, Germany, and the Netherlands.
This report calculates the total economic impact of loans made to SMEs through Funding Circle in 2018, including the number of jobs these loans supported, and the tax revenues generated in each market.
It finds the loans under management at the end of 2018 supported a £6.5 billion contribution to Gross Domestic Product (GDP) across the four markets. So every £1 lent through Funding Circle enabled small businesses to contribute more than £2 to the economies they operate in, in terms of additional GDP.
Loans taken through Funding Circle enabled 115,000 jobs in these four countries—54 percent higher than its loans were estimated to have supported at the end of 2017.
The activity and employment supported by these loans also raises significant tax revenues for local and central governments. The total loans under management at December 2018 are estimated to have generated £2 billion in annual tax receipts in Funding Circle’s markets, up 39 percent in real terms on the amount raised in 2017.
Our economic consulting team are world leaders in quantitative economic analysis, working with clients around the globe and across sectors to build models, forecast markets and evaluate interventions using state-of-the art techniques. Lead consultants on this project were: