New research from Bibby Financial Services finds 83% of Leinster SMEs remain optimistic for 2026 despite cost challenges and tighter conditions

 

• 40% of Leinster SMEs expect to increase prices for customers as a result of Budget 2026
• 9 in 10 Leinster SMEs express concerns over pension auto-enrolment, with 43% expecting to absorb the costs involved
• Over one third of SMEs lack the cashflow to scale or invest, while those with cashflow are three times more likely to expect growth
• Over half (52%) of businesses in Leinster say access to finance has become more difficult in the past six months, however 44% say their need for external finance has increased in the last six months
• 90% of Leinster SMEs plan to invest in 2026, focusing on digital technology and IT (29%), staff training (28%) and recruitment (22%), with €158,000 the average figure quoted

Two thirds (62%) of Irish SMEs say Budget 2026 has fallen short of expectations, as inflation, recruitment difficulties and tighter access to finance continue to weigh heavily on business sentiment. According to the latest SME Confidence Tracker Report from Bibby Financial Services, Budget 2026 failed to address rising costs, with those in Munster particularly critical (67%) when compared to Leinster (59%). Despite these challenges, 83% of Leinster SMEs remain optimistic about their prospects for 2026, reflecting a resilient business community determined to grow.

Inflation, finance access and Budget 2026 impact:

Inflation remains the leading challenge for SMEs in Leinster, with 42% citing it as their top concern, while 23% of business owners identify it as the issue placing the most pressure on their business. The challenge is equally strong in Munster and Connacht, where 33% of SMEs in each region say inflation is their most significant concern.

40% of Leinster respondents said they expect to increase prices for customers as a result of the Budget, while 23% anticipate reduced profit margins or workforce reductions. The top measures Leinster SMEs would like to see from Government include:

• Low-interest loans or grants for expansion and job creation (39%)
• Simplified tax structures (34%)
• Lower or stabilised energy costs (26%) particularly among transport and manufacturing firms

Pension auto-enrolment adds new cost pressures:

The introduction of pension auto-enrolment in January 2026 is set to further increase payroll costs and administrative complexity, particularly for service-led businesses and wholesale firms. While 30% of Leinster SMEs say they are fully prepared for the transition, 88% express concerns most notably increased payroll costs (35%), lack of information or guidance (31%) and administrative burden (28%).

Leinster business owners’ planned responses to additional costs vary:

• 43% will absorb the cost
• 26% will reduce other benefits
• 27% will delay pay increases
• 16% will increase prices

Link between cashflow health and business optimism:

Bibby Financial Services’ analysis highlights a strong link between cashflow health and business optimism: 60% of Leinster SMEs report stable cashflow, compared to 37% who don’t have sufficient cashflow can’t operate day-to-day operations and invest to grow.  Connaught firms are most affected, with 42% lacking the cashflow needed to scale.

Access to finance has also become increasingly difficult, with 51% of Leinster SMEs saying it has worsened over the past six months. The figure rises to 63% nationwide in manufacturing and 64% among firms struggling with cashflow. While 31% of Leinster SMEs currently use external finance, another 20% are open to doing so in the next year, with construction and smaller firms showing the highest intent.

The research also shows that businesses nationwide using external finance are significantly more likely to report growth, with 63% of users saying their sales increased over the past six months, compared to 43% of non-users.

Delayed payments stifling ability to invest and expand

Many SMEs continue to face cashflow challenges, with delayed payments and bad debt remaining persistent risks to profitability and liquidity. 65% of Leinster SMEs report slower invoice payments, highest across all provinces.

Bad debt remains persistent with 43% in Leinster writing off debt in the last year, averaging €28,5000 in losses. This is in comparison to 39% nationally.

Despite this, businesses are increasingly turning to external finance and government-backed supports such as SBCI funding to maintain stability and unlock investment opportunities. SMEs with strong cashflow and no exposure to late payments or bad debt are significantly more confident, underlining that financial health is the foundation for growth.

Nine out of ten Leinster SMEs plan to invest in 2026:

Despite these headwinds, Leinster SMEs continue to plan for the future. 90% intend to invest in the year ahead, focusing primarily on digital technology and IT (29%) staff training and development (28%), and recruitment (22%).

Among the opportunities Leinster SMEs see for 2026, attracting new customers (48%), taking on new staff (32%) and adopting new technology, such as AI (25%) come out on top. There is increased optimism among larger businesses with a €5 million+ turnover, and those confident about their prospects in 2026. Larger businesses plan to invest between €100,000 and €1 million, with an overall average of €158,000, a decrease of €40,000 from the last wave of results in Q1 2025.

Key motivations for investment include staying ahead of competitors (30%), business expansion (24%) and reducing costs or increasing efficiency (23%).

Ala Browne, Sales Lead at Bibby Financial Services Ireland, said: “Leinster SMEs are facing real pain points when it comes to growth. Businesses across the region can see the customer opportunities ahead of them, but rising costs, tighter access to finance and ongoing cashflow pressures are making it harder to stay competitive.

What our research shows clearly is that liquidity is now the deciding factor between standing still and scaling up. Leinster firms with healthy cashflow are three times more likely to expect growth, but many cannot unlock that potential without faster access to the right finance solutions.
As SMEs look to win new customers, invest in their teams and adopt new technologies, it’s essential that both government and industry work together to ease credit constraints and support the region’s ambition. Leinster’s business community is ready to grow, they just need the financial runway to make it happen”

About Bibby Financial Services Ireland:

Bibby Financial Services is Ireland’s largest independent SME funder. With over 19 years of experience operating throughout the island, the company facilitates more than €1 million weekly in new funding limits, in addition to processing significant weekly payments for existing clients. Bibby Financial Services offers flexible finance solutions to help businesses manage cashflow, drive growth, complete management buy-ins and buy-outs, restructure and fund mergers and acquisitions.

We provide support to businesses with a turnover of €750,000 or more, with expertise across sectors such as Manufacturing, Food and Beverage, Wholesale, Transport, Construction, Recruitment, and a broad range of professional business services. The company was awarded Financial Services Company of the Year at the Chambers Ireland InBusiness Recognition Awards 2025.

Bibby Financial Services Ireland is part of Bibby Financial Services Group, an independent financial services partner to over 8,500 businesses across 9 countries in Europe and Asia, with a total funding capacity of €1.3 billion.

For more information about Bibby Financial Services Ireland, please visit: www.bibbyfinancialservices.ie

Follow us on Linkedin at https://ie.linkedin.com/company/bibby-financial-services-ireland