Amany Attia/ThinCats.
Mid-sized SMEs prove resilient in the face of forecasted rise in insolvency rates
Although ThinCats analysis forecasts a rise in business insolvencies for 2023, demand for funding is expected to remain high.

As pandemic support programmes wind down and economic challenges continue to hit the business sector, insolvency rates are predicted to continue rising this year.
According to analysis conducted by alternative lender ThinCats of more than half a million UK businesses, the current high demand for funding is expected to remain high as businesses look to grow, either organically or through acquisition.
Insolvency rates rose from historic lows in 2021 (0.39 per cent) to 0.65 per cent last year, but this is still one third of the peaks seen following the 2008 financial crash (2.1 per cent) and below 2019’s pre-pandemic level of 0.74 per cent.
“We expected an element of ‘catch up’ in 2022 insolvencies following the easing of pandemic support measures, which had helped sustain many businesses during 2020 and 2021,” ThinCats CEO Amany Attia said.
“Unfortunately, mid-sized businesses were also hit by a dangerous cocktail of rising inflation and input costs during 2022 so it is a credit to their ongoing resilience and adaptability that insolvency rates remained below their pre-pandemic levels.”
Attia noted that the robustness of the sector was also demonstrated by the addition of 38,000 new mid-sized businesses in 2022 — an increase of 7.7 per cent.
“Historically, mid-sized businesses are more resilient than smaller ones and we expect this to become increasingly relevant if economic conditions weaken from here, although recent Bank of England forecasts suggest any downturn could be shallower and shorter than predicted a few months ago,” she continued.
“Looking forward, although we believe insolvency rates for mid-sized businesses will continue to rise during 2023, perhaps above pre-pandemic levels in some sectors, many businesses are thriving in the current environment and will need additional funding to accelerate their growth trajectories.”
According to Attia, the new business pipeline “remains strong” and there have not been significant increases in stress levels there or from existing investors.