Britain’s smaller companies borrowed more in 2025 than at any point since the pandemic, and the money arrived from a far wider set of lenders than a decade ago. Gross bank lending to smaller businesses rose 9% to £68bn, the second highest total in thirteen years, according to the British Business Bank’s most recent Small Business Finance Markets report. Challenger and specialist banks supplied 60% of that lending, against 39% in 2012.

Choice has grown alongside volume. Twenty-eight new providers have entered the smaller business banking market since 2013, and the parallel growth of non-bank lenders means 68% of all SME lending last year came from either challenger and specialist banks or non-bank providers. Owners are also better informed about the options open to them, with 62% saying they knew where to find information on different types of finance, five percentage points up on the previous year.

Annual results published across the sector over the past twelve months show exactly where capital is being deployed, at what size and at what speed. Each of the leading names has claimed a distinct segment of the market and funded it properly, which gives a company with a clear plan a straightforward route to the right lender.

Tide widens the panel

Tide entered the unicorn club in September 2025 with a $120m investment led by TPG through its Rise Funds platform, alongside existing backer Apax Digital Funds. The round valued the company at $1.5bn, more than double the $650m attached to its previous $100m raise in 2021. Oliver Prill, chief executive, said the money would “accelerate our international expansion”, with product development and agentic AI named as the other two priorities. Morgan Stanley acted as exclusive financial adviser and placement agent.

The scale beneath the valuation is what benefits customers. The platform supports nearly 800,000 members in the United Kingdom, equivalent to 14% of the domestic SMB market, and more than 800,000 in India, taking the global total past 1.6 million. Launches in Germany in 2024 and France in September 2025 have opened the same tools to companies trading across borders.

Credit reaches customers through Funding Options, the finance marketplace acquired in November 2022 and still operating as a separate brand. The platform connects businesses to a panel of more than 120 lenders and has arranged over £1bn of funding for more than 17,000 British companies since the acquisition. A single application across a panel of that size turns an open-ended search into a short list, which is valuable for an owner who knows the amount required but not yet the lender.

Allica funds the middle market

Allica Bank posted its strongest results to date for 2025, with underlying pre-tax profit up 34% to £43.7m in a third consecutive profitable year. Gross revenue rose 27% to £371.3m and gross profit after risk climbed 32% to £145.3m, delivered alongside £30m of investment in new products and market development. Richard Davies, chief executive, described 2025 as “our strongest year yet”.

Lending grew across every core product. The total loan book rose 23% to £3.7bn, with commercial mortgages up 35% to £2.4bn, asset finance up 19% to £507m, growth finance up 127% to £171m and bridging finance up 85% to £121m. The bank advanced more than £1.3bn of new lending during the year, its second consecutive year above £1bn, and customer deposits rose 29% to £5.7bn.

The opportunity sits in the segment it has chosen. Established SMEs account for roughly a third of the economy, and the bank has passed 6% penetration of that market with 10% the stated aim for 2028, backed by a $155m Series D round. Active business reward account customers rose 133% to more than 14,000, and primary banking customers rated the service at a net promoter score of +76, up from +67 in November 2024. A market-first bridge-to-term product launched during the year, giving borrowers a clean path from a short-term facility into longer commercial property finance.

OakNorth backs bigger deals

OakNorth delivered £223m of pre-tax profit in 2025 on gross revenue of £605.9m, built around entrepreneur-led companies in the lower mid-market. New originations rose 33% to £2.8bn and the total facilities portfolio grew 18% to £7.2bn. Adjusted return on equity reached 22% and the efficiency ratio improved from 29% to 26% excluding one-off strategic spending, giving the bank considerable capacity to keep lending.

The transatlantic dimension has become a growth engine. American borrowers accounted for 40% of new lending in 2025, three years after the bank entered the market. Rishi Khosla, chief executive and co-founder, said the result showed the model is “transferable and competitive in one of the world’s largest lending markets”. Customers funded across both territories during the year included F1 Arcade, Ultimate Performance and Mamas & Papas, which points to the appetite for companies scaling on either side of the Atlantic.

Cumulative lending has passed £15.1bn over the bank’s first decade, supporting more than 70,000 jobs and generating around £40bn of economic value by its own assessment. A pending acquisition of Community Unity Bank, subject to regulatory approval, and a business banking transaction with Monite widen the product set further. Credit decisions have factored in the potential impact of AI on borrower sectors since 2024, a forward view that works in favour of companies investing ahead of the curve.

iwoca speeds up working capital

iwoca increased the value of finance provided to British businesses by 60% during 2025, issuing 58,000 loans worth more than £1.3bn. The company has now funded 96,000 businesses since launching in 2012, up from 60,000 a year earlier, and employs around 700 people across London and Frankfurt. Decisions on its flexible loan product are typically made within 24 hours, which suits a company acting on a supplier discount or an equipment purchase.

Appetite has moved towards larger facilities. Loans of between £50,000 and £100,000 accounted for 42% of all applications in the first quarter of 2026, against 27% in the same quarter a year earlier, according to the lender’s SME Expert Index. Brokers expect the trend to continue, with 57% anticipating further growth in demand for mid-sized business finance over the following six months.

Funding capacity has been built to match that ambition. A £250m facility agreed with a leading British bank and Waterfall Asset Management adds to arrangements completed over the past two years with Lloyds, Citi, Barclays, Värde Partners, Pollen Street Capital and Insight Investment. Romain Guilleminet, head of capital markets, said the facility was “backed by some of the best institutional partners in the market”. Distribution has widened in parallel through partnerships with platforms including Teya, Zempler and Love Finance, so the finance now reaches owners inside the software they already use.

Funding Circle broadens its range

Funding Circle raised its full-year outlook on 8 September 2026 after a first half in which credit extended rose 52% year on year to £1.7bn. Revenue increased 50% to £138m and profit before tax quadrupled to £24m, with assets under management up 15% to £3.3bn. Guidance for the year now stands above £255m of revenue and above £40m of pre-tax profit, roughly double the prior year.

Term loans remain the engine, extending 43% more credit than a year earlier and generating £29m of pre-tax profit at a margin above 26%, up from close to 17%. The newer FlexiPay and business card products grew transaction volumes 71%, with revenue up 83% to £30m and assets under management up 78% to £300m. Around a third of customers now use more than one product, and the platform records a customer transaction every 20 seconds, against every 38 seconds at the end of last year.

Underwriting speed comes from data depth. Sixteen years of proprietary information covering 10 billion data points feed credit models the company says discriminate risk three times better than standard bureau scores, and more than 75% of lending decisions are now made instantly. Roughly 91% of assets under management sit with institutional investors who own the loans and carry the credit risk, with forward-flow commitments of about £2.4bn including a £500m arrangement signed in August. Lending through the platform supported over 117,000 jobs and contributed £7.9bn to national output in 2025. Lisa Jacobs, chief executive, has told the board she intends to step down by the end of September 2027, giving the company ample time for an orderly succession.

Monzo banks a million

Monzo Business passed one million customers in late July 2026, the first fully regulated British digital bank to reach the milestone, six years after the division launched in March 2020. Roughly one in six British businesses and one in five newly established firms now bank with it, across all 121 postcode areas. Customer numbers have approximately doubled in under two years, with 280,000 added during the 2026 financial year.

Commercial contribution has grown with scale. The division supplied 14% of group revenue of £1.7bn, up from 12% the previous year, and 47% of monthly active business customers pay for a subscription on either the £9 Pro or £25 Team plan. Revenue also comes from interchange, interest on deposits and lending, which gives the bank every reason to keep extending credit to the companies already banking with it.

Expansion is under way beyond the domestic market, following a launch in Ireland earlier in 2026 with Spain named as the next destination. Around a quarter of new sign-ups come from companies founded within the past five years, and growth has come largely by referral between owners. Same-day account opening and integrated invoicing, tax and expense tools have made the proposition particularly useful to younger businesses building a credit history from the outset.

Reading the market

Several helpful patterns run through the numbers. Ticket size points to the lender: working capital between £1,000 and £250,000 sits with iwoca and Funding Circle, established companies requiring commercial mortgages, asset finance or growth capital fit Allica, and lower mid-market transactions above that point belong with OakNorth. Marketplaces such as Funding Options exist to make that match quickly, and the panels behind them have never been deeper.

Speed has become a real advantage. Instant decisioning on more than three-quarters of applications at one lender and 24-hour turnaround at another change what a business can do with an opportunity that appears at short notice. The high street remains strong on price for well-secured lending, and the breadth of the wider market gives owners genuine leverage when comparing terms.

The direction of demand is the most useful signal for the year ahead. Applications are moving towards larger facilities, funding lines are being expanded to accommodate them, and lenders report continued appetite from smaller companies. Capital is plentiful, competition for good credit is keen, and a business arriving with clean data and a clear use of funds will find the terms on offer among the best in a decade