SME finance needs decisive lenders more than ever

The latest UK Finance data shows that SME borrowing is gaining real momentum. Lending to SMEs rose 16% year-on-year to £5.3bn in Q1 2026, the highest level since 2021. UK Finance also pointed to a 51% increase in lending to the smallest businesses, alongside significant year-on-year growth in both the value and number of new loan approvals.

While these figures are encouraging, they should not be mistaken for a simple or straightforward market, and it certainly does not mean every SME has a straightforward route to funding. To successfully meet plans, opportunities, deadlines and ambitions, they need lenders who can keep pace with the reality of running a business in an economy that remains challenging.

The truth remains that SMEs rarely come to a lender with a vanilla case. They come with a property acquisition that needs to be completed quickly, a refinance window that is days away rather than months, a bridge that needs to carry them towards a longer-term plan, or a business model shaped by cost pressures, cashflow demands and uneven trading conditions.

The role of a specialist bank is not simply to run those cases through a system and wait for a binary answer. It’s to understand the customer, their plans and the context behind the numbers, using technology where it adds value, but relying on people where they are needed most — making the final lending decision.

A healthy SME finance market needs a range of providers that work with brokers and this last point is fundamental.

Earlier this year, the NACFB published its Intermediary Market Outlook, which underlined the value of broker led advice to SMEs, with NACFB member brokers originating £33bn in SME lending in 2025, a 25% year-on-year increase. The association’s analysis suggests the wider broker-led SME lending market is worth around £50bn annually, with its members arranging 180,000 loans for UK businesses and 62% of broker-facilitated lending delivered outside London and the South East.

Those figures reflect more than the size of the market, they highlight the role brokers play in helping lenders understand the full picture behind a funding request, particularly where circumstances are more complex or time-sensitive.

A good broker brings far more than an application form. They help explain the borrower’s experience, the property, the exit strategy and the wider commercial story behind the deal. That context matters because lending decisions are rarely made on numbers alone. A good lender then has to listen, ask the right questions, challenge where needed and make a decision accordingly. That does not mean saying yes to everything, it means being clear, responsive and accountable.

For me, being decisive is about giving brokers clarity. If a deal fits, move quickly and explain how you’ll get it done. If it doesn’t fit, be honest and say so early. Most brokers can work with any answer provided they get one quickly and understand the reasoning behind it.

That is particularly important in the current market. UK Finance’s Q1 data is encouraging, but it also shows signs that businesses are still managing volatility. Loan applications dipped in March after a strong start to the year, while overdraft applications rose and overdraft use increased in sectors including manufacturing, real estate and recreation.

The figures are encouraging, but they also reflect what many brokers are telling us every day. Businesses still need support navigating higher costs, changing markets and refinancing challenges. Access to finance remains critical, and brokers continue to play a vital role in helping customers find the right solution.

Brokers want certainty in a lender when they come with a case that needs thought, speed or both. SMEs want to know that their plans will be understood, not flattened into a template.

At Recognise, we believe good lending still comes down to people. Technology has an important role to play, but businesses and brokers value experienced lenders who listen, ask sensible questions and make clear decisions. In a market that is becoming increasingly specialist, those fundamentals matter more than ever.