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

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.

Insights

Finance in the news

View all news

Alternative Lending: Why Banks Are Bottlenecking Growth (And What To Do Instead)

Banks have become gatekeepers instead of growth partners.

For thousands of UK businesses, this simply isn’t sustainable. Banks have become painfully slow, inflexible, and increasingly out of touch with how modern businesses actually operate.

As funding pipelines dry up, alternative lending is stepping in to do what traditional finance won’t: actually support ambitious SMEs. It’s not just a trend, it’s a shift. A massive, long-overdue rebalancing of power in the business finance world; a lifeline for UK businesses who need access to capital NOW, not three months after the opportunity’s disappeared.

How Asset Finance is Powering Manchester’s Industrial Growth

Manchester is booming.

From Trafford Park to Ancoats, and from Wythenshawe to Salford Quays, this city’s business scene is alive with ambition

And it’s not just talk.

Industrial take-up is up, equipment investments are rising, and manufacturers are expanding. But here’s the catch: growth costs money.That’s why more Manchester businesses are ditching the wait-and-save approach and turning to asset finance to move faster, smarter, and without risking their working capital.

Merchant Finance: The Smarter Way to Fund Your Business

Let’s face it – traditional finance is broken. Or at the very least, it’s too slow, too rigid, and too obsessed with credit scores to be useful to the average business owner who just needs cash, quickly, without the faff.

That’s why merchant finance has been gaining traction across the UK. It’s flexible, fast, and surprisingly fair. This form of funding is quietly becoming a go-to lifeline for UK businesses, particularly those that take the bulk of their payments by card.

But what exactly is merchant finance, and why are so many switched-on businesses turning to it? Let’s break it down.

Why Asset Finance in Birmingham Is Gaining Momentum in the Construction Sector, and How Jones & Co Are Supporting the Surge

Birmingham is entering a new era of regeneration, with the construction sector standing at the forefront. Fuelled by major developments such as the £3 billion Sports Quarter, the demand for flexible and accessible funding is growing rapidly and asset finance is emerging as a critical solution. At Jones & Co, we are supporting this surge by offering tailored alternative finance options that empower businesses to grow.

Jones & Co Partners with Bizcap to Launch the UK’s First Ever Unsecured Revolving Credit Facility

Say goodbye to cash flow worries and hello to a world of opportunity. Jones & Co has become the first broker in the UK to partner with Bizcap and bring their Business Line of Credit to British SMEs, a revolutionary product offering funds at your fingertips whenever you need them.

Interest Rates Drop: What It Means for Borrowers and Finance Providers in the UK

Big news this week: the Bank of England is expected to nudge the base interest rate down from 4.5% to 4.25%. It’s the latest in a series of cuts designed to give the UK economy a much-needed boost.

But what does this actually mean for everyday borrowers, businesses, and the finance providers behind the scenes? Let’s take a closer look.

How UK Businesses Can Survive Global Tariffs in the Trump Trade Era

In the last week or so, U.S. President Donald Trump announced a series of tariffs impacting global trade, including a 10% tariff on all British exports to the United States.

How Tax Funding Can Help You Stay Ahead of HMRC Deadlines

In this blog, we explore how this funding solution can help you meet your deadlines and keep your business moving forward.

New Year Cash Flow Problems? Here’s How to Access Emergency Finance

The new year should be a time of fresh starts and planning ahead, but for many business owners, it often begins with cash flow challenges.