It is no secret that SMEs do not always get a fair hearing when it comes to funding. Too complex for the high street, too mainstream for some specialist lenders, they often sit in an awkward middle ground, underserved, misunderstood and, at times, overlooked altogether.
It is a missed opportunity. While the current economic outlook remains uncertain, these businesses are a vital part of the UK economy. Many are growing steadily, seeking capital to expand, invest, or move into new premises. The need is there. It just requires a lender with the confidence and capability to step in.
More cases are emerging in what we refer to as the “missing middle.” These are well run, creditworthy businesses with solid trading records, but just enough complexity to fall outside the comfort zone of more rigid lenders. They are not high risk. In most cases, it is a non standard ownership structure, a historic credit issue, or growth plans that do not sit neatly within a tick box approach. These businesses are fundamentally sound. They just do not fit the mould. For brokers, they represent a strong opportunity if they can access lenders willing to take a more practical, case by case view.
This focus on SMEs is well placed, particularly in light of recent data. According to UK Finance’s Business Finance Review (March 2025), gross lending to SMEs rose by 13% in 2024, reaching just over £16 billion. Every quarter of the year saw an increase compared to the same period in 2023, with sectors such as agriculture, real estate, health and recreation seeing the biggest rises. However, overall net lending remained negative at around minus £7 billion, showing that many SMEs are still repaying more than they borrow. Another key shift is that 60% of SME lending is now coming from outside the main high street banks, a clear sign of a more diverse and competitive lending space.
A cautious market, but not a closed one
Let us be clear, the SME space is not without its challenges. It is a competitive sector, and many businesses are feeling the effects of higher costs, softer demand and general uncertainty. From a lender’s perspective, there is a need for realism. Not every business will be right. But that is no reason to overlook the sector or underestimate its potential.
Instead, we are focused on careful growth. We work with brokers who know their clients well and can give us the full picture. Our teams in London and Manchester continue to see demand from businesses, particularly those looking to acquire or expand into their own premises. Many of these clients have worked with us before, perhaps through a buy-to-let deal, and now need support with a more operational purchase. It is not unusual to see the same directors across multiple asset types, and we see that as a strength, not a concern. In Q1 2025 alone, we are expecting to report over 30% year-on-year growth in SME lending with lending of over £133m. Behind that is a strong pipeline, with £140m in loans approved but not yet drawn at quarter end.
Why this matters for brokers
The key message for brokers is simple. Do not write off SMEs. Yes, the high street has tightened up. Yes, some lenders will avoid anything outside the mainstream. But that does not mean the deals are not there, or that they cannot be done.
There are lenders who can look beyond the surface. For example, we are happy to explore deals that sit slightly outside standard policy, provided there is a clear rationale and a strong business case. What we aim to offer is reliability, responsiveness and a genuine willingness to engage with complex cases. And that includes better servicing the needs of that all important missing middle.
