Business Finance & Lending Statistics 2025

The past few years have been marked by continued economic volatility and shifting financial landscapes for businesses, both in the UK and globally. As we move into 2025, companies are still navigating the lasting effects of previous disruptions while facing new challenges and opportunities in the financial sector.

Following the upheaval of Brexit and the economic fallout from the COVID-19 pandemic, businesses have had to adapt to a rapidly changing environment. Supply chain disruptions, labour shortages, and increased operational costs have persisted, forcing companies to rethink their financial strategies. The war in Ukraine has also continued to influence global markets, contributing to elevated energy costs and ongoing economic uncertainty.

In 2024, the Bank of England maintained a cautious stance on interest rates, balancing inflation control with the need to support economic growth. Businesses have felt the impact of these policies, with borrowing costs remaining a key concern for those seeking to expand or stabilize their operations. Additionally, shifts in consumer behaviour, driven by both economic pressures and advancements in technology, have altered market dynamics across multiple sectors.

Against this backdrop, the state of business lending in 2025 is a critical topic. Are companies securing financing to fuel growth, or is the tightening of credit conditions limiting opportunities? How are alternative lending options shaping the landscape, and what role does government policy play in supporting or restricting access to funding?

In this article, we will examine the latest data on business finance and lending, offering insights into the evolving economic climate and its impact on UK businesses.

Key Statistics Leading to Current Business Challenges in 2025

Before we look at the current lending stats, let’s look at some of the data which has led to the current financial climate for businesses which has influenced either the need for funding or the ability to secure funding.

• As of March 2022, it was estimated that COVID-19 cost small businesses in excess of £109bn with 1-in-6 small business owners saying they didn’t think they would recover to pre-pandemic trading levels.
• The Bank of England recently halved growth predictions for 2025, from 1.5% to 0.75%, showing a much bleaker prediction for the UK economy.
• A recent report from Peninsula Group’s Employer Confidence Index shows that 83% of businesses are worried about the rising costs, and over two-thirds have flagged payroll as a major concern.
• Corporation tax rate remained at 19% for companies with profits under £50,000 (small profits rate) and 25% for companies with profits of over £250,000 (main rate).

• UK Bank of England Base Rate was at an all-time low of 0.1% pre-pandemic. It subsequently rose sharply to 5.25% in August 2023, but has slowly decreased since then, and now stands at 4.5%.

[Source: Bank of England]

Business Lending Statistics for 2025

• According to EY Item Club, business lending is expected to grow by 5.6% this year, up from the 2.1% decrease we saw in 2023, as inflation continues to ease.
• EY Item Club forecast write-off rates on loans to UK businesses to remain low at 0.17% in 2025 and into 2026, as borrowing costs lower.
• According to a study from the British Business Bank, nominal gross bank lending to SMEs fell in 2023 by 9% to £59.2bn but remained the joint third-highest on record.
• Lending from challenger and specialist banks was down 2% to £34.8bn in 2023, from £35.5bn in 2022, remaining at the second highest recorded rate behind 2022.
• Challenger banks and specialist banks lent around £35.5bn in 2022, exceeding lending by traditional banks.
• According to a study by the British Business Bank, 66% of SME innovators utilised business finance compared to 58% of all businesses.
• Asset finance markets saw an increase in new business by 11% to £22.5bn.
• Success rates for business loan applications fell sharply in 2022 from 80% year-on-year to just 60%.
• IBISWorld is estimating business lending to PNFCs to reach £496bn in 2023 which represents a rise of 4%.

[Source: IBISWorld]

[Source: IBISWorld]

• The effective interest rate on new SME business loans was 5.92% as of January 2023

Start-Up Loan Scheme Statistics for 2025:

Whilst Union Business Finance doesn’t offer the Start Up Loan scheme ourselves, we know it may be a suitable option for some of our small business clients. Therefore, no statistics article would be complete without some data regarding this important funding solution for small businesses:

• According to the same report from EY Item Club, loans to SMEs have fallen by 3.7% year-on-year, as smaller businesses continue to focus on repaying loans taken through COVID-19 support schemes.
• As of February 2025, the UK Government's Start Up Loans scheme has continued to support new businesses across the nation. The scheme provided over 118,000 loans, amounting to more than £1.1 billion in funding.
• The same report found that for every £1 invested in the programme, between £5.50 and £5.60 of additional Gross Value Added (GVA) is generated for the UK economy.
• Additionally, the companies supported by Start Up Loans have a much higher chance of surviving their first five years in business; 69% compared to 43%.
• 40% of the granted Start Up Loans were to female entrepreneurs, and 20% of granted loans were to entrepreneurs from Black, Asian or other ethnic minority backgrounds.

Consumer Statistics for 2025

For B2C businesses, it’s important to know what is happening in terms of consumer lending and consumer confidence when planning for the next 12-18 months, so this section provides some insight into that.

• Unsecured credit lending is expected to persist in 2025 and 2026, and unsecured lending will remain strong but ease slightly to 6.5%.. This is primarily driven by stabilising inflation and steady wage growth.
• Defaults on UK consumer loans are also expected to remain low at 1.0% in 2025 and 2026, due to high employment and the savings built up during the pandemic strengthening the health of household finances.

Current data shows strong gains so far and predicts even further gains in consumer confidence as we head further into 2025 and into 2026.

Grow Your Business Faster Today

As shown above, companies who secure funding to grow their business faster and those who have access to funding are more likely to survive more challenging times.

Contact us to learn more about how we can help your business today.