Increased SME lending by high street banks
Organisation: UK Finance
Type: Press Release
Date: 16 June 2025

Increased SME lending by high street banks

UK Finance's latest Business Finance Review shows that business lending by the high street banks increased in the first quarter of 2025 to £4.6 billion, a sixth consecutive quarterly rise and the highest amount since the second quarter of 2022.

This represents a 14 per cent increase year-on-year, with the rise driven by agriculture, manufacturing, wholesale and retail, and health sectors.

Lending to the smallest businesses (up to £2 million annual turnover) was particularly strong, up nearly 30 per cent year-on-year, whilst lending to medium-sized businesses increased nine percent.

Approvals and utilisation rates

Loan and overdraft approvals increased year-on-year. Compared with Q1 2024, the number of new loans and overdrafts approved were 37 per cent and eight per cent higher respectively.

The number of new finance approvals continue to vary across sectors, though in almost all sectors the volume of approvals in Q1 was up on the same period a year ago. While the number of applications approved is on the increase, the value of approvals in the quarter was down on a year ago.

SMEs continue to retain a reasonable degree of headroom within their existing finance facilities with utilisation rates having stayed consistent at around 50 per cent. This suggests the ongoing demand for new or increased facilities is a precautionary move in the face of risks of rising costs and renewed pressure on margins.

David Raw, Managing Director of Commercial Finance at UK Finance, said:

“SMEs are a vital part of the UK economy, and it is encouraging that lending to them continues to go up. It is particularly welcome to see small businesses specifically accessing greater levels of finance than this time last year.

“The regulatory environment is important and that is why we think the government should make the Growth Guarantee Scheme permanent and increase the size of the scheme's budget. This would help support even more SME lending.

“Banks have finance available for SMEs, enabling them to invest and grow. The industry will continue to work with businesses, government and regulators to support both the supply and demand of finance, driving economic growth.”

Notes to editors

  • The full Business Finance Review Q1 2025 can be found here.
  • The data is provided by the following institutions:

    Great Britain - Barclays, Co-Operative Bank, Lloyds Banking Group, HSBC Bank, NatWest Group, Santander UK, Virgin Money (CYBG).

    Northern Ireland - Bank of Ireland, Danske Bank, First Trust and Ulster Bank, plus the SME business of Barclays, HSBC Bank, NatWest and Santander UK for Northern Ireland customers.