Rapidly increasing costs are putting pressure on small businesses across the UK, according to new research from Cashplus Bank.

Its analysis of income and spending data of “micro businesses” found that firms have seen strong gains in income over the past 12 months wiped out by even faster rising expenses.

For instance, companies are spending on average 37% more on motor fuel since the beginning of 2022 while spending on transport costs across air, rail and road increased by 94% year on year, exacerbated by disruption from Covid-19.

Cashplus Bank’s analysis showed that small business income and outgoings over the six months to February 2022 were broadly flat. Outgoings began to rapidly increase after February, and by August they were up 21% year on year. Over that same period, income increased by 25%.

However, the picture changes when looking at data from March to September 2022. Over this period, income grew by 8% but was outstripped by cost growth at 10%. From August to September, outgoings were up by 0.8% while income fell by 1%.

Rich Wagner, CEO of Cashplus Bank, said: “While the micro business population is diverse and varied, it’s obvious that this vital part of the UK economy is feeling the squeeze of the cost-of-living crisis.

“Small businesses will be seeing margins under real pressure as basic, unavoidable day-to-day costs increase, meaning otherwise-healthy businesses will be tipped into loss-making.

“With added uncertainty over energy costs from April next year, many small companies will be deeply concerned that the cost of doing business will become unmanageable.”

Martin McTague, national chair of the Federation of Small Businesses (FSB), added: “The cost of doing business crisis is biting hard, driven by energy bills, fuel prices, rising input costs, increasing labour costs, and high taxes.

“Our own research shows that from spring through summer, nearly nine in 10 small firms were reporting higher costs. We’re also seeing growing numbers of small businesses seeking finance to help with cashflow.

“Without further support in the coming months to ease the soaring costs, there is a real danger that we will see more previously healthy and strong small businesses struggling to make ends meet.”

Cashplus Bank’s report came after separate research conducted by YouGov and commissioned by Meta revealed that 17% of small business owners feared their businesses might close in the future, while 42% said that avoiding closure was their priority over the next six months.

It also found that 31% of small business owner-directors were worried that their businesses would not be able to keep up with outgoings, while 26% were using less electricity to save on bills.