What is happening with SME funding?
Despite a tough trading environment, the data on SME lending is encouraging. Banks are lending more to small businesses than at any point since 2022.
- SME lending rose 30% year-on-year — the strongest growth since 2022
- Many SMEs still face a funding gap — unable to access the loans they need or finding the process too difficult
- Larger loans are growing in popularity — more businesses are borrowing over £100k to fund growth, especially in tech, healthcare, and logistics
- Specialist lenders are often more flexible than high street banks — whole-of-market access through a broker significantly improves the range of options available
Bank of England held base rate at 4.25% in June 2026 — waiting for inflation to cool.
73% of UK SMEs expect to grow in the next 12 months — confidence remains strong.
Business confidence and growth
Despite the economic pressures, UK SME owners remain broadly optimistic about their prospects.
- 68% of small business owners say their business is resilient
- 73% expect to grow in the next 12 months
- Nearly half of SMEs are exploring AI and automation tools to save time and improve profitability
- 70% of SMEs are planning staff training or apprenticeships this year to stay competitive
What is the government doing for UK SMEs?
The government has made two notable announcements relevant to small business owners this week.
New SME champions appointed: Alex Depledge will advise on support for entrepreneurs and scale-ups. Emma Jones CBE will lead efforts to tackle late payments — one of the most damaging cash flow problems facing small firms.
Help for defence sector SMEs: The government is encouraging small firms to get involved in UK defence supply chains, with more contracts and funding expected to follow. This is a significant opportunity for manufacturing, engineering, and logistics businesses.
Key takeaways for UK SMEs this week
- Check whether you qualify for new or improved SME funding — lending conditions have improved significantly
- Explore AI and automation tools to drive efficiency and margins
- Consider staff training and apprenticeships — 70% of your competitors already are
- Monitor the Bank of England base rate — the next decision is due in August 2026
- Watch for government SME support announcements in the next Budget — defence and tech sectors are a particular focus
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