More than half of SMEs in the UK relied on loans to survive throughout the pandemic in 2020, according to a new survey.

CapitalBox, which surveyed SMEs across Europe, found that 56% of UK SMEs had applied for a least one loan since the beginning of the pandemic last year. The UK had the third-highest rate, sitting behind Finland (60%) and Sweden (58%).

The survey found that the loans were primarily used to cover overheads (35%) and staff wages (13%) to keep their businesses operating. However, there were some that used the funds to invest and innovate in order to get them through a challenging year. A third invested in technology to allow digital transformation, while 21% used their loans to hire stronger talent get them through.

A third of all businesses surveyed applied for loans through government schemes like the UK’s Coronavirus Business Interruption Loan Scheme or the Corona Soforthilfen in Germany. At 43%, the UK’s SMEs were most reliant on government support, significantly more than the second-highest (Finland, 27%).

CapitalBox also found that a quarter of SME owners turned to their friends or family for financial support, while 21% used credit cards.

“The pandemic has left many businesses, especially SMEs, in financially dire straits. For most, the only way out of a very difficult situation has been to secure a loan to get through the pandemic.“In 2020, the ambition, motivation and resilience of SMEs has been tested like never before. In times like these, it is vital that these financially under-served SMEs get the support they need. Regardless of the source, financial support needs to fast, fair and safe, getting money to where and when businesses need it most.”

Scott Donnelly, CEO of CapitalBox