Lending momentum to small and medium-sized businesses in the UK is on the rise, signalling a potential shift in economic confidence and investor opportunity. A sharp uptick in gross lending and robust approval rates underscore a renewed appetite for SME finance—and a landscape that’s evolving far beyond the traditional high street banks.
Gross lending to UK SMEs surged 13% in 2024, surpassing £16 billion, according to new data from UK Finance. This marks a consistent quarter-on-quarter improvement compared to 2023, indicating growing traction in the lending space. While overall lending volumes still trail pre-pandemic levels, the increase reflects a market regaining strength after a challenging few years.
Key sectors such as agriculture, real estate, healthcare, and recreation saw notable growth in borrowing, pointing to where businesses are seeing and seizing opportunity. Meanwhile, industries like manufacturing, transport, and storage reported reduced demand for new finance, revealing a more selective recovery across the economy.
Despite the positive lending figures, net lending remained in the negative, at around minus £7 billion—showing that SMEs are still paying down existing debt faster than they’re taking on new liabilities. This cautious but confident posture suggests many businesses are strengthening balance sheets while remaining open to strategic investment.
One of the standout developments was the increase in finance approvals. Loan approvals jumped 23% to nearly 45,000, while overdraft approvals spiked 47% to nearly 59,000. However, overdraft utilisation has held steady, reflecting continued financial discipline. Even more telling, 60% of lending now comes from non-traditional sources, signalling a shift in where SMEs are turning for capital—and where investors should be watching.
Total client sales across SMEs in 2024 reached £313 billion, just shy of 2023 levels. Meanwhile, the stock of advances closed the year at £21.2 billion, up 4.4% from the prior year and nearly matching pre-pandemic figures.
David Raw, Managing Director of Commercial Finance at UK Finance, highlighted the year as a turning point. He noted stronger demand, increased approvals, and readiness from lenders to support future growth—despite ongoing economic headwinds.
UK Finance’s findings underscore a pivotal moment for SME lending in the UK. The appetite for strategic growth is returning, and lenders—both traditional and alternative—are prepared to support it.
Duke Capital Limited (LON:DUKE), formerly Duke Royalty Limited, is a Guernsey-based provider of hybrid capital solutions for small and medium-sized enterprises (SME) business owners in the United Kingdom, Europe and North America, combining the features of both equity and debt.
