Securing the right business loan can be a pivotal moment for your business, whether you’re looking to scale up operations, invest in new equipment, or smooth your cash flow. Yet navigating the finance market can feel really overwhelming – lenders balance risk, regulations evolve, and economic headwinds change all the time.
In today’s market, recent trends offer hope but should always be handled with caution too. According to UK Finance’s Business Finance Review for Q1 2025, gross lending to SMEs by major retail banks surged to £4.6 billion, marking a 14 per cent increase year‑on‑year and the highest level since mid‑2022. The increase gives hope of renewed lender willingness, driven in part by stabilising interest rates and property valuations, but it also underscores a landscape still below pre‑COVID norms. As accountants and business owners alike, this backdrop matters as it means that while opportunities are opening up, due diligence remains important.
Not all business loans are created equal – asset finance allows you to acquire necessary equipment without draining cash, spreading the cost over time, or unlock funds via asset refinancing, such as machinery or vehicles.
Traditional term loans offer lump‑sum capital, best suited for planned investments, whereas overdrafts and revolving lines of credit are useful for managing short‑term working‑capital needs.
The type you choose should align with both your current financial picture and your growth plans. Accountants play a crucial role here – by modelling repayment capacity and forecasting cash flow, you help ensure the right match between loan structure and business trajectory. Equally, clarity in purpose, investment versus survival, expansion versus contingency, guides the ideal loan term, size, and type.
Practical guidance for borrowers
Start with a clear financial narrative, lenders respond best when they understand what they’re financing, not just “working capital,” but what that working capital will achieve. Is it restocking inventory ahead of peak demand, or bridging revenue gaps due to seasonal variation?
Understand your financial health. The Q1 2025 data I mentioned above reflects growing lending, but many small businesses are still treated with caution. Transparency and preparedness, demonstrated through clear accounts, a credible business plan, and realistic forecasts, are your allies.
Always look beyond the high street to find other options too. According to the British Business Bank (the UK government’s economic development bank) challenger banks and specialist lenders now account for over 60 per cent of SME lending. These lenders often offer more flexible and innovative products, tailored to the nuances of SMEs, particularly those focused on digital, creative, or regional markets.
Not securing a loan today doesn’t mean it’s a ‘no’ forever. Many SMEs withdraw from external finance after a rejection, and that caution can stifle growth. But given the recent uptick in lending, it may be wise to revisit financing conversations periodically, especially if you’ve improved your financial footing and savings can be made.
If you’re an accountant advising clients or a business owner mapping your next step, Able CF can help – we’re a steadying hand that offers clarity and confidence. Securing the right business loan needn’t be a leap of faith, it’s a calculated move when armed with clarity, preparation, and the right advice. That’s where your role as an accountant, or your own financial acumen, becomes invaluable. Let the £4.6 billion lending boost in Q1 2025 be a signal that the tide is turning, and business finance is becoming more accessible, if navigated wisely.
If you need help and guidance finding the right business loan, get in touch with us.
