Key findings
- 55% of businesses planning investment will use retained profits or cash reserves.
- 25% will use bank lending or an overdraft, and 18% asset finance or leasing.
- 22% will rely on internal cash alone.
- 5% expect to use private equity or venture capital.
How do UK businesses fund investment?
From what they have already earned. Among the 491 organisations planning investment, 55% will draw on retained profits or cash reserves. That is more than twice the share using the next most common source, bank lending or an overdraft (25%).
Asset finance or leasing is used by 18%. Grants or public funding and existing shareholders are on 13% each. Private debt (7%) and private equity or venture capital (5%) are rare.
One in five (19%) expect to use no external finance at all.
Growth is being funded out of the margin
How does your organisation expect to fund its planned investment?
- Internal sources
- External sources
Respondents could choose more than one, so figures total more than 100%.
View data
| Answer | % |
|---|---|
| Retained profits or cash reserves | 55% |
| Bank lending or overdraft | 25% |
| No external finance expected | 19% |
| Asset finance or leasing | 18% |
| Grants or public funding | 13% |
| Existing shareholders | 13% |
| Private debt or alternative lenders | 7% |
| Private equity or venture capital | 5% |
Why does it matter where the money comes from?
Because the same margin is under pressure. Two-thirds of leaders (67%) name a cost among their top two risks for the year ahead. The source of growth funding and the target of cost pressure are the same pot.
The same margin is doing two jobs
What this means
Self-funded growth is a sign of health. It is also fragile. When employment or energy costs rise, the first thing a self-funded business cuts is the plan that hasn't started yet.
That makes the 86% who plan to diversify a softer number than it looks. The intent is real. Whether it survives the year depends on the margin holding.
For lenders, advisers and anyone selling into growth budgets, the opening is clear. Three-quarters of these businesses are not using bank lending, and most have not looked beyond their own balance sheet.
Frequently asked questions
How do most UK businesses fund growth?
From retained profits or cash reserves. 55% of UK businesses planning investment will use them, according to The Reality Department's Business Reality Index.
How many UK businesses use bank lending to invest?
25% of UK businesses planning investment expect to use bank lending or an overdraft.
How many UK businesses use private equity or venture capital?
5% of UK businesses planning investment expect to use private equity or venture capital.
Methodology
The Reality Department surveyed 500 senior decision-makers at UK organisations employing 50 or more people for wave one of the Business Reality Index. The funding question was asked of the 491 planning investment. Fieldwork: August 2026.
Related: How are UK businesses planning to grow?
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