Small Business Finance Markets 2024/25 (British Business Bank)

Summary

• Gross bank lending to UK SMEs reached £62.1bn in 2024, representing a 4.9% nominal increase compared to 2023, while total bank stock declined 2.5% to £179bn.p.14
• SME asset finance new business grew for the fourth consecutive year, rising 0.9% to reach a record £23.5bn in 2024.p.14
• Challenger and specialist banks accounted for 60% of total bank lending to UK smaller businesses.p.8
• Over half of smaller businesses (53%) prioritized environmental sustainability for the upcoming 12 months, although only 6% reported measuring or monitoring carbon emissions.p.82

Key insights

1. 1. Gross bank lending to UK SMEs rose 4.9% in nominal terms to £62.1bn in 2024, marking the third highest level since records began in 2012.p.14
2. 2. Challenger banks' share of bank lending to smaller businesses reached 60% of total bank lending.p.8
3. 3. UK SME equity investment in the first three quarters of 2024 was £6.89bn, driven heavily by £3.45bn deployed during Q2.p.93
4. 4. Growth stage companies raised £2.95bn in equity during the first nine months of 2024, representing a 30% increase compared to the same period in 2023.p.94
5. 6. Ethnic Minority-led businesses reported higher long-term growth ambition (67%) than White-led businesses (38%), but 17% identified an unmet need for finance without applying.p.58
6. 7. Smaller businesses in highly deprived areas demonstrated greater growth ambitions (49%) than those in less deprived areas (40%), but faced lower awareness of non-core finance options.p.71
7. 8. Among smaller businesses that undertook environmental sustainability measures, 88% funded them through internal cash flow and savings.p.87