Lending to SMEs reaches highest level since pandemic in Q1 2026 – UK Finance
Gross lending by the main high street lenders was up 16% on the same quarter the year before.
UK Finance reported growth in lending to small and medium-sized enterprises (SMEs) at the start of 2026, with gross lending by the main high street lenders up 16% on the same quarter the year before.
Gross lending reached £5.3bn, marking the highest level since the end of the pandemic.
Lending to the smallest businesses also surged, with sectors such as agriculture, real estate, wholesale and retail, and recreation and personal seeing large increases.
Finance approvals continued to grow in the first three months of 2026, especially for loans, with gains seen across sectors.
Approvals to small firms remained strong and there was a rise in approvals to medium businesses.
There were signs of the impact of the Iran conflict, with loan applications dipping in March after a strong start to the year.
Overdraft applications increased after usual seasonal movements, similar to what was seen in 2022 with the war in Ukraine.
Q1 saw a modest rise in overdraft utilisation, particularly in manufacturing, real estate and recreation.
Deposits continued to trend down, but at a slower pace, with declines in both sight and time deposits.
Gary Thompson, sales director at Asset Advantage, said: “Given everything that has been going on in the world over the past few months, we should be hugely encouraged by today’s figures.
“Small and medium-sized enterprises (SMEs) continue to demonstrate real resilience and ambition to invest in growth despite a challenging operating environment.
“It certainly mirrors what we are seeing on the ground in terms of business volumes and what we are hearing from our broker partners.”
Thompson added: “As businesses continue to navigate economic uncertainty and the impact of geopolitical tensions on supply chains, trade, costs and confidence, access to finance will remain absolutely critical.
“While uncertainty doesn’t eliminate opportunity, it does force us to be disciplined and to think more strategically – particularly when it comes to funding needs.
“Lenders have to be willing to provide that opportunity, looking beyond ever-tightening risk appetites and lending criteria to really understand the story behind the application and ensure good businesses get the fair hearing they deserve.”
He said: “This remains a key strength of more specialist funders, who are able to offer a more flexible and pragmatic approach to work with brokers in support of their SME clients.”
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