Concerns about potential tax changes in this month’s Budget may be contributing to a slowdown in commercial borrowing appetite among SMEs, according to Atom bank’s latest SME Pulse.
The quarterly poll of commercial mortgage brokers found that clients are increasingly cautious as speculation grows around property tax, Capital Gains Tax and business rates.
The SME Pulse for Q3 2025 shows that 92% of brokers reported some level of client concern about possible property tax or Capital Gains Tax changes, with 53% describing their clients as ‘very concerned’.
A similar trend emerged around rumoured changes to business rates, where well over half of brokers said clients were slightly concerned, and a further third reported them as very concerned.
As a result, 41% said clients were delaying investment decisions until the Budget is delivered on 26th November and the tax implications become clearer.
Brokers also reported a softening in demand for external funding. Half of those surveyed said borrowing appetite among clients was unchanged, up four percentage points on the previous quarter.
Meanwhile, the proportion of brokers seeing rising demand fell by five percentage points to 41%.
Almost all respondents said a reduction in tax or business rates would prompt clients to borrow, with 48% saying their clients would likely invest in new premises and 29% expecting them to expand their team if costs were reduced.
The Pulse also explored SME attitudes towards green lending. Over a third of brokers said they were not currently discussing the need for greater energy efficiency with clients.
However, 90% said their clients would be likely to seek finance for improvements if the Budget introduces new tax breaks for green investment.
Atom bank said this highlights a potential opportunity for brokers, even if forthcoming incentives do not materialise.
Tom Renwick, head of business lending at Atom bank, said: “Demand from business borrowers seems to have plateaued, with exactly half of the brokers polled for the SME Pulse reporting no change in appetite.
“And the reason seems pretty clear – this month’s Budget.
“Given the uncertainty about potential changes to the tax system, some business owners are understandably opting to pause their plans until they have a clearer picture of their future costs.
“Tax represents a significant outlay for SMEs, so it’s little wonder brokers are seeing so much concern among their clients about the likelihood of larger bills.
“A focus on overheads is perhaps also influencing considerations about energy efficient improvements.
“Businesses want to reduce their energy bills, whether driven by financial concerns, environmental worries, or both.
“However, that will only be possible if the sums add up, which is why owners will be keen to see whether the Chancellor will outline relevant tax incentives.
“What will be key for businesses as they pursue their next steps is access to easy, fast and flexible finance.
“Brokers clearly believe that in the event of new business incentives, their clients will want to act.
“Lenders need to be ready to support those borrowers once the dust settles post-Budget, while brokers will need to prioritise working with lenders best placed to support their SME clients.”
