SMEs make ‘digital-first mindset’ pandemic changes permanent, our new research shows

Five years after the onset of the COVID-19 pandemic, our latest Impact Report shows that the adaptations made by small and medium-sized businesses during that difficult period have been made permanent, fundamentally changing SME Britain.

“The digital-first mindset that emerged during COVID-19 is now a permanent feature of SME strategy, positioning them for long-term success,” says Funding Circle’s Chief Executive Officer, Lisa Jacobs.

Based on a detailed survey of our customers we found that, overwhelmingly, adaptations implemented during the pandemic have been made permanent.

The business leaders we spoke to feel that the pandemic has made them more resilient and better prepared to handle subsequent economic shocks, including inflation, geopolitical tensions and supply chain disruptions.

In addition, two-thirds of small businesses anticipate growth in 2025, with technology identified as a key driver of investment.

Pandemic changes

The research indicates that 64% of SMEs made significant changes to their business strategies in response to the pandemic as more people worked from home, online deliveries took precedence over in-person shopping, and certain business models became unviable. These pivots included adopting new technologies, launching new products or services, and shifting to a new customer base.

Notably, 92% of businesses that made these changes have continued them post-pandemic, demonstrating the long-term value of these adaptations.

Learnings from COVID-19: enduring resilience

Six in ten businesses (58%) are better able to navigate headwinds thanks to their pandemic experiences, the permanent shifts they made, and their improved personal and professional resilience. Specifically, businesses feel better equipped to handle economic uncertainty, the high cost of living and supply chain disruptions.

Additionally, 63% of small business leaders have changed their approach to running and planning their businesses. They say they would be more likely to adopt new technology, take a longer-term mindset when planning, and feel more able to make difficult business decisions as a result.

Positive outlook for 2025

Despite the macroeconomic headwinds, SME Britain remains positive and primed for growth. Two-thirds (65%) of small businesses expect to grow in the year ahead, and almost half (43%) are more confident about the next 12 months compared to last year.

Technology is a priority for growth investment, with more SMEs focusing on digital transformation over physical expansion.

The pandemic has also influenced SMEs’ finance requirements: 74% have increased their appetite for short-term financing, reserving balance sheet for future shocks, and 61% have a greater need for business loans.

Backing businesses to take their next step

We’re proud that the research also shows our lending in 2024 reached businesses in every corner of the UK, including across each of the UK’s 650 Parliamentary constituencies. 

In 2024, our loans under management contributed a significant £7.2bn to UK GDP, supported over 87,000 jobs, and was associated with activity stimulating £2bn in tax revenues.

If you would like to read the full report, you can do so here.

28/04/25: While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.