A third of UK SMEs bet on R&D to fuel growth in 2025
One in three UK SMEs (33%) believe that research and development (R&D) is essential for continued innovation and sustainable growth, according to new research by Growth Lending, a specialist growth capital provider for fast-growing SMEs. The findings highlight how UK SMEs are increasingly investing in technology and innovation to secure a competitive edge and drive growth, despite ongoing economic challenges.
The findings, published in the lender’s Geared for Growth 2025 report, reveal the steps SMEs are taking to position themselves for long-term success, with 40% of businesses anticipating revenue growth of 5-10% over the next 12 months. Strategic investment in R&D, technology, and talent development are central to these growth ambitions.
Technology and digital transformation have become critical priorities, with 16% of SMEs identifying technology integration as a focus for growth. Investments in advanced tools, such as AI, automation and cloud computing, are enabling businesses to streamline operations, reduce overhead costs, and enhance customer experiences.
R&D investments are also playing a pivotal role in enabling businesses to develop unique offerings, adapt to market demands and maintain relevance in competitive markets. This commitment to innovation reflects a significant shift towards growth-oriented initiatives for UK SMEs.
As the competition for skilled workers intensifies, talent acquisition and workforce development are becoming essential to SME growth strategies. The report highlights that 12% of SMEs cite difficulties in sourcing and retaining skilled staff as a substantial growth barrier while 16% are prioritising talent acquisition to support their business goals in the year ahead.
Commenting on the research, Kimberley Martin, Managing Director at Growth Lending, said: “The challenges of the current economic environment persist for SMEs. With rising costs and talent shortages creating additional barriers to growth and innovation, businesses must focus on strategic investments to stay competitive.
“R&D is a critical growth driver, enabling businesses to innovate and adapt to shifting market demands. The difficulty is that R&D can be an expensive endeavour and traditional funding options don’t always align with the needs of high-growth businesses; SMEs battle with rigid criteria from the banks or sacrifice equity to access cash from venture capital firms. Alternative lenders bridge this gap, offering the flexibility and expertise required to support ambitious SMEs, enabling them to overcome these barriers, invest in innovation and build resilience throughout 2025.”
