Why demand for SME finance is high
We all know that SMEs are facing unique financial pressures – this is as true this year as it was last year, the year before that, the year before that… you get the point.
2025 has its own special flavour of finance drivers, including:
Rising overheads – With National Insurance contributions increasing, employers are spending more just to cover payroll, leaving less cash for other areas of the business.
Slow payment terms – Industries like healthcare often face slow payment cycles, making cash flow management a challenge. Finance solutions such as invoice financing can bridge these gaps.
Expansion – Sure, we’re living through “unprecedented times”, who hasn’t? Even when the future is uncertain, growth opportunities exist. With rates being as favourable as they are, now might be the best time in recent history to take advantage of a loan before interest rates climb further.
The reality of business lending in 2025
While the news tells us that business confidence is at its lowest in years, the finance sector is telling a different story.
According to Colin Goldstein, Commercial Growth Director at iwoca, “Although optimism is quite high, the UK’s 5.5 million SMEs are operating in an incredibly challenging lending market.” He then adds, “From SME brokers across the country to official Bank of England data, the evidence is clear that the majority of high street banks are reducing their lending to small and medium-sized companies. This means that the importance of alternative lenders is more apparent now than ever.”
And this is happening as lenders are more open to approving loans than ever before – the market is buoyant and there is a strong appetite for business finance (86% of brokers predict that demand for SME finance will rise over the next six months).
