The UK had 5.7 million private sector businesses at the start of 2025, up 3.5% (191,000) on the start of 2024 but still 4.9% below the roughly 6.0 million of early 2020. Of those, 5.64 million are small (0 to 49 employees), 38,435 are medium-sized and 8,335 are large. About 75% have no employees at all. Small and medium-sized businesses account for 60% of private sector employment and 51% of turnover.
The rest of this article sets out the numbers, what they do and do not tell you, and how smaller businesses fund themselves.
Key Takeaways
- 5,690,265 private sector businesses at the start of 2025, per the Department for Business and Trade.
- 99.85% are SMEs. The 8,335 large businesses employ 40% of the private sector workforce and generate 49% of turnover.
- The 2025 rise was almost entirely businesses with no employees. Employers fell by 9,000.
- Gross SME bank lending reached £68bn in 2025, and challenger and specialist banks wrote 60% of it.
- Around 50% of smaller businesses used external finance in 2025, mostly credit cards, overdrafts and leasing or hire purchase.
How many UK businesses are there, and how big are they?
The Department for Business and Trade publishes the Business Population Estimates, which is the main source for the whole private sector. It counts businesses at the start of each year and includes an estimate of the unregistered businesses that never appear on any tax register.
The position at the start of 2025:
| Size band | Businesses | Share of all businesses | Employment (thousands) | Turnover (£ millions) |
|---|---|---|---|---|
| No employees | 4,272,535 | 75% | 4,664 | 402,611 |
| 1 to 9 employees | 1,150,875 | n/a | 4,156 | 701,248 |
| 10 to 49 employees | 220,085 | n/a | 4,324 | 776,163 |
| Small (0 to 49) | 5,643,495 | 99.18% | 13,144 | 1,880,023 |
| Medium (50 to 249) | 38,435 | 0.67% | 3,738 | 948,639 |
| Large (250+) | 8,335 | 0.15% | 11,246 | 2,696,001 |
| All businesses | 5,690,265 | 100% | 28,128 | 5,524,662 |
Turnover figures exclude financial and insurance businesses, where turnover is not available on a comparable basis. Employment here means employees plus the working owners.
The definitions matter. In these statistics a small business is anything with 0 to 49 employees, medium is 50 to 249, large is 250 or more, and an SME is anything under 250. A one-person consultancy and a 45-person manufacturer are both "small". That is why 99.18% of the population sits in the small band, and why the headline "small businesses" figure tells you very little about what a typical lender sees.
Employment and turnover: who does the work, who earns the money
SMEs employ 16.9 million people, 60% of the total, and generate about £2.8 trillion of turnover, 51%. Break that down and the picture is less even:
- Small businesses: 13.1 million people (47%) and £1.9 trillion of turnover (34%).
- Medium-sized businesses: 3.7 million people (13%) and £0.9 trillion (17%).
- Large businesses: 11.2 million people (40%) and £2.7 trillion (49%).
The 8,335 large businesses are 0.15% of the population and take almost half the turnover. Working it through: 11,246,000 employment across 8,335 businesses is about 1,350 people per large business. The no-employee group has about 1.1 people per business (4,664,000 across 4,272,535), which is simply the owner.
The no-employee group is the biggest by headcount of businesses and the smallest by money. Its £402,611m of turnover is 7.3% of the £5,524,662m total (402,611 divided by 5,524,662). Spread across 4,272,535 businesses, that is roughly £94,000 each. Treat it as a rough average, not a benchmark. Turnover for unregistered businesses is estimated rather than reported, and the Department says employment and turnover in this publication are indicative.
Change on last year and on the 2020 peak
The private sector population ran as follows at the start of each year, in thousands:
| Year | Businesses (thousands) |
|---|---|
| 2020 | 5,981 |
| 2021 | 5,591 |
| 2022 | 5,509 |
| 2023 | 5,555 |
| 2024 | 5,499 |
| 2025 | 5,690 |
The fall from 2020 to 2021 was 6.5%, the largest year-on-year drop in the series since 2010. Numbers then drifted sideways for three years before the 2025 rise.
Against 2024: the population grew by 191,000 (3.5%). Within that:
- Employing businesses fell by 9,000 (0.7%).
- Businesses with no employees rose by 201,000 (4.9%).
- Of that rise, 174,000 (6.1%) were unregistered businesses and 27,000 (2.2%) were registered businesses with no employees.
Against 2020: the population is down 290,000 (4.9%). Employers are actually up by 5,000 (0.4%). The whole fall sits in non-employers, down 295,000 (6.5%), and most of that is unregistered businesses (down 283,000, or 8.5%).
So the recovery in 2025 is a recovery in the smallest end of the market: sole traders and owner-only companies, many of them below the VAT threshold. It is not a recovery in businesses that hire. If you are sizing a market for lending, that distinction changes the answer.
Sole traders and businesses with no employees
A business with no employees is a sole proprietorship or partnership run only by its owners, or a company with a single employee assumed to be a working owner. At the start of 2025 there were 4.3 million of them, 75% of the population. The remaining 1.4 million (1,417,730) are employers.
By legal form, the whole private sector was:
- 3.2 million sole proprietorships (57%), of which about 3.0 million had no employees and 180,000 did.
- 2.1 million actively trading companies (37%), of which 948,000 had no employees and about 1.2 million employed people.
- 368,000 ordinary partnerships (6%), of which 287,000 had no employees and 81,000 did.
The larger point is registration. The Office for National Statistics recorded 2.6 million businesses registered for VAT and/or PAYE, 46% of the estimated population. The other 3.0 million (54%) trade without either registration. The registered share has crept up from 44% in 2020. Only 12% of sole proprietorships are registered, against 44% of ordinary partnerships.
This is why you will see two very different totals quoted for the UK. The Office for National Statistics counted 2.73 million VAT and/or PAYE businesses in March 2025, up 0.4% on March 2024. That count covers registered businesses only, and includes a few thousand central government, local authority and non-profit bodies. The Department's 5.7 million adds an estimate of the unregistered businesses and covers the private sector only. Both are right. They measure different things.
The registered-business count shows the same direction for sole traders as the lending conversation would suggest. In the Office for National Statistics bulletin, companies rose 1.8% to 2,096,600 and now make up 76.7% of registered businesses. Sole proprietors fell 4.1% to 380,520 (13.9%) and partnerships fell 3.9% to 160,865 (5.9%). Of those 2.1 million companies, 44.0% are single-employee limited companies. In plain terms, more one-person businesses are choosing to trade through a limited company.
If you are one of them and are weighing up funding, our guide to Start Up Loans and how a business credit score is built are the two places to start.
Regions and nations
The Department counts businesses by head office location. A branch in Leeds of a company headquartered in London counts in London. At the start of 2025:
- England: 5.0 million
- Scotland: 361,000
- Wales: 194,000
- Northern Ireland: 139,000
- London: 1.042 million, the largest single region, with the South East next
The registered-business count from the Office for National Statistics gives the regional split for March 2025:
| Region | Registered businesses (thousands) | Share |
|---|---|---|
| London | 538 | 19.7% |
| South East | 405 | 14.8% |
| East | 271 | 9.9% |
| North West | 266 | 9.7% |
| South West | 235 | 8.6% |
| West Midlands | 216 | 7.9% |
| Yorkshire and The Humber | 191 | 7.0% |
| East Midlands | 181 | 6.6% |
| Scotland | 173 | 6.3% |
| Wales | 105 | 3.8% |
| Northern Ireland | 80 | 2.9% |
| North East | 73 | 2.7% |
Between March 2024 and March 2025 the biggest percentage rise was in Northern Ireland (1.5%, 1,150 businesses), led by professional, scientific and technical and agricultural businesses. The biggest fall was in the East Midlands (0.6%, 1,005 businesses), driven mainly by the removal of about 5,000 pension-scheme VAT registrations from the register, which hit the finance count.
One caution from the Office for National Statistics: multiple registrations can sit at a single address, which distorts figures for small areas. Use these numbers for regions, not for postcodes.
Sectors
The two publications cut sectors differently, so read the label.
All private sector SMEs, start of 2025 (Department for Business and Trade):
- Professional, scientific and technical: 819,000 SMEs, 14%
- Wholesale and retail trade: 547,000 SMEs, 10%
Wholesale and retail is far bigger by money than by headcount of businesses. It takes 32% of all SME turnover and 14% of SME employment. Construction (11%), professional, scientific and technical (11%), administrative and support services (10%) and manufacturing (9%) together take another 41% of SME turnover. Accommodation and food service is a useful contrast: 9.2% of SME employment but only 2.9% of SME turnover. That is a labour-heavy, thin-margin profile, and lenders price it accordingly.
VAT and/or PAYE registered businesses, March 2025 (Office for National Statistics):
- Professional, scientific and technical: 420,000 (15.3%), the largest group
- Wholesale and retail, including motor repair: 396,000 (14.5%)
- Construction: 385,000 (14.1%)
- Arts, entertainment, recreation and other services: 192,000 (7.0%)
- Information and communication: 188,000 (6.9%)
For the year to 2025 the Department reports the biggest numeric rise in professional, scientific and technical (65,000 businesses) and the biggest percentage rise in human health and social work (12%). Administrative and support services lost the most businesses (20,000). On the registered count, mining, quarrying and utilities rose 5.7%, helped by new electricity producers, property rose 3.7%, and transport and storage fell 2.1%, with road freight down 5.3% to its lowest since 2015.
Start-ups in 2025
The British Business Bank reports 314,000 start-ups created in 2025, up 1% on the previous year, alongside a net rise in the overall business population.
Be careful not to confuse that with the population statistics above. The Department's estimates measure net change only. They cannot be used to count starts or closures, because a business that opens and a business that shuts in the same year simply cancel out. Births, deaths and survival come from the Office for National Statistics' separate business demography series, which covers businesses registered for VAT and/or PAYE.
How small businesses borrow
The British Business Bank's annual Small Business Finance Markets report is the main official read on this. The 2025/26 edition covers calendar 2025.
Bank lending
- 2024: gross bank lending to smaller businesses was £62 billion, up 4.5% on the year. It was the first time since 2020 that bank lending grew faster than asset finance.
- 2025: gross SME bank lending rose 9% to £68 billion, the second highest level in 13 years after the 2020 pandemic peak, as credit conditions eased gradually through the year.
Challenger and specialist banks
Challenger and specialist banks wrote 60% of gross SME bank lending (excluding overdrafts) in 2025, up from 39% in 2012. Their share has exceeded the big five banks for the fifth year running. Add non-bank lenders and 68% of overall SME lending in 2025 came from outside the traditional big banks.
Since 2013, 28 new providers have entered smaller business banking, and 43% of them are or have been British Business Bank delivery partners.
What this means in practice: if your only conversation about funding is with the bank that holds your current account, you are looking at a minority of the market. We see this regularly with owners who assume a decline from their own bank is a decline from everyone.
How many borrow, and with what
Around 50% of smaller businesses used external finance in 2025. The most common products in the third quarter of 2025 were:
| Product | Share of smaller businesses using it |
|---|---|
| Credit cards | 19% |
| Overdrafts | 16% |
| Leasing and hire purchase | 13% |
The British Business Bank's reading is that debt is being used for stability rather than growth: flexible, short-term finance rather than term loans for expansion. I would add that credit cards and overdrafts are among the most expensive ways to hold working capital, so a business sitting on them permanently is usually paying for a cash flow problem it has not fixed. Our guide to improving cash flow covers where to start.
For context, the share of small businesses using external finance had been 50% in the third quarter of 2023, fell to 43% in the second quarter of 2024 and held there in the third. It was back to around 50% across 2025. Awareness has improved too: 62% of smaller businesses said in 2025 that they knew where to get information on the different types of finance, five percentage points higher than in 2024.
Asset finance
The Finance & Leasing Association tracks new business written by its members. Its October 2025 figures showed:
- Total asset finance new business up 7% on October 2024.
- Up 2% over the ten months to October 2025 compared with the same period of 2024.
- New asset finance lending to SMEs up 8% in October 2025, the same rate as for larger businesses.
- By sector: manufacturing up 34%, construction up 8%, services up 3%.
- By type: business new car finance up 7%, plant and machinery up 6%, commercial vehicles down 6%.
The Association's chief economist said members were on track for a record almost £41 billion of new business in 2025, that the industry funds about a third of UK investment in machinery, equipment and vehicles each year, and that around a third of high-growth firms use asset finance. Note the wording: that is a projection made in December 2025 from ten months of data, not a reported full-year total. Full-year figures for SME asset finance specifically should be checked when the Association publishes them.
What the numbers mean if you are borrowing
Three practical points follow from the data.
- You are probably not the average small business. The typical UK business is a sole trader or owner-only company with no staff. If you employ 10 to 49 people you are in a group of 220,085 businesses, about 3.9% of the population. Lender appetite for you is different from their appetite for a one-person company.
- Sector shapes pricing. A lender looking at hospitality sees a labour-heavy business with thin turnover per head. One looking at wholesale sees high turnover and thin margins. Expect different questions on the same size of facility.
- The market is wider than the high street. With challenger and specialist banks writing 60% of gross SME bank lending, a decline from one lender is rarely the end of the conversation. The reason for the decline matters more than the decline itself.
We help UK businesses compare funding across banks, challengers and asset finance providers through Deplexifi UK.
Frequently Asked Questions
How many small businesses are there in the UK in 2025?
The Department for Business and Trade estimates 5,643,495 small businesses (0 to 49 employees) at the start of 2025, out of 5,690,265 private sector businesses. That is 99.18% of the population.
How many UK businesses have no employees?
4,272,535, which is 75% of private sector businesses. They provide 4,664,000 employment (the working owners) and about £402.6 billion of turnover.
Is the number of UK businesses going up or down?
Up on last year (3.5%, or 191,000), and still down 4.9% (290,000) on early 2020. The 2025 growth was in businesses with no employees. Employers fell by 9,000.
Why do some sources say 2.7 million businesses and others 5.7 million?
The 2.73 million figure counts businesses registered for VAT and/or PAYE, from the Office for National Statistics register in March 2025. The 5.7 million figure adds an estimate of unregistered businesses and covers the private sector only.
How much of SME bank lending comes from challenger banks?
Challenger and specialist banks accounted for 60% of gross SME bank lending, excluding overdrafts, in 2025, according to the British Business Bank. Including non-bank lenders, the share outside the big banks was 68%.
The 2.7 million and 5.7 million business counts measure different things: one is registered businesses only, the other includes an estimate of unregistered ones.