Commercial Finance Brokers Play Key Role in SME Lending

The NACFB estimates that its members account for nearly two-thirds of the broker-facilitated SME lending market, bringing the total market size to about £50 billion annually. Additionally, membership growth was noted, with more than 100 new broker firms joining in 2025.

The lending environment has become increasingly fragmented. According to the British Business Bank's Small Business Finance Markets report, gross SME bank lending reached £68 billion in 2025, a 9% increase and the second-highest level seen in 13 years, following the 2020 pandemic peak. Notable statistics from the report indicate that challenger and specialist banks provided 60% of this lending, up from 39% in 2012. Including non-bank lenders, 68% of SME lending originated from these sources. Since 2013, 28 new providers have entered the smaller business banking sector, and 62% of smaller businesses reported knowing where to find finance information, a 5-point increase from 2024.

Approximately half of smaller businesses utilized external finance, with credit cards (19%) and overdrafts (16%) being the most common products in the third quarter of 2025. The British Business Bank indicated that this trend suggests debt finance is primarily used for stability rather than growth.

The NACFB's findings further illustrate the value brokers add to the lending process: brokers considered an average of six lenders per deal, and a quarter of clients had faced earlier rejections before securing funding through a broker. Notably, 62% of broker-facilitated lending occurred outside London and the South East.

Kieran Jones, NACFB's head of communications and advocacy, emphasized that the details behind the headline figures reveal the operational dynamics of this market. He noted that brokers' careful structuring, regional reach, and problem-solving abilities are critical to their success.

Furthermore, property investors are increasingly shifting towards commercial and semi-commercial lending as a strategic choice. The TAB's Mixed-Use Mortgage Monitor recorded semi-commercial lending of £250 million in the third quarter of 2026, projecting an annualized run rate of £1 billion, with 30 active lenders and 99 dedicated products.

Sam Rose, director of TR Commercial Finance, noted that smaller landlords exiting five-year fixed rates are now finding their returns lower than anticipated, prompting them to maximize each deal. He pointed out that lenders have become more willing to engage in commercial lending after prior post-pandemic pullbacks.

Elliot Cotterell, director at Cotterell & Cotterell, remarked that the industry's transition to specialist funding is more affected by confidence than by regulation, highlighting the importance of mindset in this landscape. He mentioned that clients often prefer to have a single firm manage all aspects of their financing, from residential mortgages to developments.

For SME borrowers who rely on brokers to navigate lender options, there is ample opportunity for advisers. Those demonstrating an efficient process, lender expertise, and success with previously declined cases will likely have a competitive edge.