UK SME Lending Up 9% to £68 Billion in 2025

Gross small and medium-sized enterprise (SME) bank lending in the United Kingdom rose 9 percent to 68 billion pounds in 2025, reaching the second-highest level in the past 13 years after the coronavirus peak in 2020, as credit conditions gradually improved throughout the year.

The increase reflects broader signs of resilience among smaller businesses amid ongoing economic challenges, according to the British Business Bank's Small Business Finance Markets 2025/26 report, released this week. A total of 314,000 startups launched nationwide, marking a 1 percent rise from 2024 and contributing to a net growth in the overall business population. Around half of smaller businesses relied on external finance during the year, with credit cards used by 19 percent, overdrafts by 16 percent and leasing or hire purchase by 13 percent in the third quarter. These figures indicate that debt is often supporting operational stability rather than expansion, the report noted.

Awareness of financing options also advanced, as 62 percent of smaller businesses reported knowing where to seek information on various products, up five percentage points from 2024. Competition in the market has diversified,...