A new report from UK fintech startup Juice Ventures, which was exclusively shared with TFN, is shining a light on a major yet often overlooked problem crippling small-business funding: founder psychology.
The study, titled “Borrowing Blind,” released today at Web Summit in Lisbon, reveals that nearly 60% of UK SME founders give up on loan applications before completion. Not primarily because they are unqualified, but because of confusion, shame, and fear of rejection.
In an exclusive interview with TFN, Katherine Chan, CEO of Juice, discusses the landscape. Here you go!
Why are founders walking away?
Juice Ventures surveyed 250 small business founders and interviewed leading fintech academics to uncover what’s really behind the UK’s £65 billion SME funding gap.
The findings are stark: 59% of founders quit loan applications midway due to emotional and procedural hurdles. Over half associate borrowing with stigma or failure, 42% feel embarrassed asking lenders basic questions, and 57% find the application process overwhelming. And nearly a quarter admitted they signed finance agreements without fully understanding the terms.
The report introduces the idea of “anticipatory rejection,” where founders self-exclude from funding to avoid the emotional cost of potential rejection. Such a behavioural barrier compounds the financial one, making it much harder for small businesses to access the growth capital they need.
The scale of the problem
This funding gap isn’t just bad news for entrepreneurs. Looking at the broader picture, it’s a drag on the entire economy. The British Bank estimates the SME funding shortfall at £65 billion, and modelling by the Centre for Finance, Innovation and Technology suggests this could cut UK GDP growth by 1.2 percentage points annually. More than half of the surveyed founders have postponed growth strategies, such as hiring and innovation, due to a lack of funding.
Katherine Chan, CEO of Juice Ventures, argues fintechs can lead the charge in bridging this divide. “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.”
Supporting this perspective, Oxford Saïd Business School professor Nir Vulkan found that entrepreneurs with business education request nearly 50% more funding and raise twice as much capital compared to those without. Education, it seems, unlocks confidence.
He shares, “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.”
What needs to change
There is cause for optimism: 60% of founders say they would consider borrowing if they had better access to educational resources, and 82% believe plain-language lending terms would boost their confidence.
Juice Ventures is urging fintechs, traditional lenders, and policymakers to rethink SME funding. The recommendations include embedding transparent, easy-to-understand tools into digital lending platforms, creating targeted financial literacy campaigns, and integrating mentoring networks to demystify borrowing.
But beyond these tactical fixes lies a deeper question: Can the UK’s entrepreneurial ecosystem overcome not just a capital shortage, but a cultural shift?
