Capital lending to UK businesses surged in 2025, driven primarily by small and medium-sized businesses, according to findings from UK Finance.
In its latest Business Finance Review, the group found that UK high street banks increased gross business lending to £17.5bn in 2025, up from £16.1bn the previous year in the second consecutive year of growth.
UK Finance said that momentum accelerated through the year, with the last quarter of 2025 seeing £4.6bn lend, extending the streak to eight straight quarters of year-on-year growth.
The review found that small businesses were key to the surge, with firms with up to £2m in annual turnover seeing lending increase by more than quarter from the previous year.
“SMEs are a vitally important part of the UK economy and the banking sector is proud to support them,” said David Raw, managing director of commercial finance at UK Finance.
“It was good to see gross lending increasing for another consecutive year of growth in 2025, driven by stronger demand from the smallest businesses and support from high street lenders.”
The report also found that utilisation of existing overdrafts is below pre-pandemic levels, suggesting that companies are preserving financial headroom amid a period of distinct uncertainty and geopolitical instability.
