A lag in traditional lending  

UK Finance’s research is echoed by the British Business Bank (BBB) whose recent report found that gross lending to SMEs remains lower than in both 2020 and 2022. Furthermore, 2024 was the fourth consecutive year in which total bank lending and overdrafts had fallen. 

This lack of finance is part of a long-term pattern. The BBB states that the UK has historically low business investment compared to G7 counterparts, with investment slowing further since the Global Financial Crisis.  

But mid-market businesses are the backbone of the UK economy. They fuel regional employment and spark innovation. When access to finance is restricted, the nation’s capacity to scale production and improve efficiency suffers. These firms strike the ideal balance of size and agility, enabling them to seize emerging opportunities.  

Those opportunities exist – but today’s economic climate poses significant hurdles: rising input costs, volatile interest rates, labour shortages, supply chain disruptions, and heavier tax burdens. Among such disruption, access to rapid financing is essential. 

The mid-market is being left behind 

The borrowing environment for smaller and medium-sized businesses is significantly different. Firms with an annual turnover of less than £2m saw a 28% increase in funding, while mid-sized businesses saw a decline. 

So, what’s driving the discrepancy?  

In some cases, the banks are simply not quick enough to meet the needs of medium-sized businesses. Many mid-market firms have experienced the challenge of needing finance more quickly than traditional lenders can respond. A new contract. An acquisition target. A supply chain shift that demands more working capital. These moments demand quick decisions, and some traditional lenders simply can’t move that fast. 

In other instances, lending criteria are too rigid. Traditional lenders sometimes struggle to understand a business beyond its balance sheet and don’t dig deeper to see if circumstances justify further consideration. 

Loan-to-Value rules can also put up roadblocks, often before the lender has properly got to grips with the business’s history, health and prospects. Sound businesses are denied finance because they don’t meet inflexible criteria.   

Funding that moves at the pace of businesses 

SMEs are increasingly seeking new ways to finance growth. Data from UK Finance showed that 60% of SME lending originated from outside the main high street banks in 2024.  

Alternative finance providers are part of this increasingly dynamic ecosystem where more agile lenders can take a clearer, faster view of a company’s true position. That means understanding the story behind the financials – the quality of the customer base, the reliability of revenue, the resilience of the management team, the depth of the order book. Ultimately, the practical reality of how the business works. 

Openness to opportunity 

The range of alternative finance options is growing constantly. FinTechs have shown that there are multiple ways to support a business’s financial needs. Technology has enabled new players to enter the market and offer services to sectors or business sizes where they have experience and deep knowledge. 

At CAPEDGE, we only work with medium-sized British businesses. We take the time to understand their story, evaluate their need and create financing solutions that are both fast and flexible. Get in touch to explore a range of funding options that could help your business turn opportunity into growth.