SME lending hits post-pandemic high in Q2 – UK Finance
Gross lending to small and medium-sized businesses (SMEs) reached £5.35bn in the second quarter of 2026.
Gross lending to small and medium-sized businesses (SMEs) reached £5.35bn in the second quarter of 2026, according to the latest Business Finance Review from UK Finance.
This was the highest quarterly level recorded since the pandemic and marked two-and-a-half years of lending growth.
Gross lending was more than 26% higher than during the same quarter of 2025.
Real estate and professional services remained resilient, while lending to hospitality and manufacturing businesses weakened.
Monthly figures showed new lending peaked around the start of the quarter before slowing as conflict in the Middle East affected business confidence.
Smaller companies recorded the sharpest fall, while lending to medium-sized businesses remained more stable.
Loan applications from medium-sized companies fell by 40% between March and April.
Loan and overdraft applications dropped at the end of the first quarter, although activity recovered slightly after ceasefire talks in June.
Businesses made greater use of overdrafts across all sectors, with utilisation reaching 51.4%.
This was the highest level since March 2020.
David Raw, managing director of commercial finance at UK Finance, said: “The continued growth in SME financing since the pandemic is evidence of the sector’s resilience and testament to the collaboration between banks and businesses.
“Amid continued geopolitical tension, small businesses’ confidence inevitably took a bigger hit, and a more cautious business outlook across the sector reflects the uncertainty businesses face going forward and the impact this has on SME lending.”
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