Confusion & shame drive UK SME founders to abandon loans

Research by Juice has revealed behavioural barriers that are significantly contributing to the UK's GBP £65 billion SME funding gap, with nearly 60% of entrepreneurs abandoning loan applications midway through the process. The findings highlight that confusion, shame, and fear of rejection are core reasons for abandoning applications, which in turn restricts small business growth and impacts the wider economy.

Confidence gap

The survey, which included 250 SME founders, found the majority describe themselves as underconfident borrowers. Less than half of these founders feel very confident in their understanding of lending terms. Over half associate borrowing with feelings of shame or failure.

Many entrepreneurs see debt as something to conceal rather than use as a lever for business growth. This cultural attitude contributes to hesitancy in seeking external finance, even when such funding is essential for scaling their businesses.

Application barriers

According to the research, 59% of founders have abandoned a loan application at some stage, mainly due to a lack of clarity and a sense of being overwhelmed. The process often makes them feel nervous, with 57% reporting such emotions during applications. Nearly a quarter of surveyed founders admitted to signing finance agreements they did not fully understand.

The absence of plain-language explanations exacerbates uncertainty. About 42% of founders feel embarrassed to ask basic questions, and 82% believe that using simpler language would increase their confidence in borrowing.

Economic effects

The gap in SME funding carries wider consequences. The British Bank estimates this deficit could suppress UK GDP growth by approximately 1.2 percentage points each year for the coming decade, according to modelling from the Centre for Finance, Innovation and Technology (CFIT). Over half of the founders delayed growth plans due to lack of access to finance, affecting their ability to hire, drive innovation, and expand into new markets.

Behavioural hurdles

The report identifies a behavioural pattern referred to as "anticipatory rejection," where founders avoid applying for funds altogether to prevent the perceived reputational or emotional cost of being turned down. This self-exclusion is seen as a major contributor to the size of the funding shortfall.

Impact of education

Juice also highlights the potential for financial education to boost borrowing confidence and outcomes. Professor Nir Vulkan of Oxford Saïd Business School said,

"Our data shows that funding requests rise by 48.59% among those entrepreneurs with business education. On average, they raise twice as much as those without. The takeaway is clear that education builds confidence, and confident founders pursue strategic capital."

Recommendations for action

The firm calls for fintech companies, lenders and regulators to address behavioural barriers. Recommendations include embedding plain-language communication in digital lending, co-creating targeted financial education campaigns, and integrating advisory support and peer-to-peer mentoring. The report also suggests designing lending products that take real-world confidence gaps into account, and incentivising the adoption of financial education within fintech regulations.

Katherine Chan, CEO of Juice, said,

"The report highlights that there is more than a funding gap for SMEs, there's a massive confidence gap. Thousands of founders aren't walking away because they're unqualified. They're walking away because finance feels like a trap. They think it's complex, inaccessible, and culturally uncomfortable. SMEs are facing endemic inaccessibility when it comes to funding, and that's a design failure within the lending landscape. We need to be able to service capital alongside confidence. That means giving founders the tools for clarity, control and context, including data that levels the playing field and support that follows them through their journey. Fintechs have a role to play here as allies in building financial capability."