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What Rising Public Borrowing Could Mean for Your Business Finance Strategy in 2025

The latest Spring Statement from the Labour government has left many business owners feeling uncertain about the future. With inflation rising, national insurance contributions increasing and major cuts to welfare and public sector jobs, confidence in the UK’s economic stability is at an all-time low. Understandably, businesses are becoming more risk-averse, hesitant to invest and worried about securing finance.

However, while the headlines paint a bleak picture, the reality in the finance market is quite different. Lenders remain highly active, and their appetite for approving business finance is stronger than ever. 

If you’ve been watching the news and thinking it’s the wrong time to invest or expand, you may be missing out on some of the best finance deals in years.

The impact of rising public borrowing

Public borrowing continues to rise as the government funds its economic policies, infrastructure projects, and ongoing commitments. This has two major consequences:

Increased demand for credit – The government’s borrowing competes with private sector borrowing, which can tighten the availability of credit.

Higher interest rates – To attract buyers for government bonds, interest rates may rise, potentially making borrowing more expensive over time.

Despite these challenges, lenders are still offering highly competitive rates for business loans, asset finance, tax funding and more. Yes, inflation is going up, however, at Jones & Co, we are still achieving single digit rates, and our clients are still borrowing and remaining profitable!

What does this mean? That the news isn’t necessarily indicative of what’s happening in the real world. 

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).

How businesses can strengthen their finance strategy

Economic uncertainty or not, here is some solid advice to consider when planning your business finance strategy in 2025:

Review and restructure existing debt – If your business already has loans, refinancing now while rates remain stable could save you money in the long term.

Explore alternative finance options – Traditional bank loans aren’t the only option. Alternative finance solutions like asset finance, invoice financing, and private lending can provide the flexibility your business needs.

Seek expert guidance – Navigating the current market requires expertise. A corporate finance broker can help you find the best funding solutions tailored to your business needs.

Looking for a little finance advice? Give us a shout

At Jones & Co, we have long-standing relationships with lenders across the UK. 

The news is saying one thing, lenders are saying another. Our advice? Now may well be the best time to secure finance if you want to get ahead of the pack. 

Don’t worry too much about the news, don’t worry too much about the budget. Yes, they’re important, but they don’t tell the whole story. If you want some real, no-obligation financial advice, contact our expert team today.

How Jones & Co can help

At Jones & Co, we understand that every business is unique, and so are its financial needs.

That’s why we craft tailored finance solutions that enable businesses to thrive, no matter the challenge or opportunity.

With access to a vast network of trusted lenders, we’re here to simplify the process, offering straightforward, personalised guidance designed around you and your goals. Whether you’re looking to manage cash flow, invest in growth, or expand operations, our experts are ready to connect you with the ideal funding solution.

Contact our expert team today for a free, no-obligation consultation and take the first step toward business growth. 

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