A recent study by iwoca reveals a trend of SMEs favoring alternative lenders over traditional banks. Brokers are increasingly turning to non-bank lenders for quicker loan decisions, with 61% submitting more applications to these providers. The SME Lending Thermometer shows a rise in demand, indicating a shift in the finance landscape.

The demand for finance among SMEs is on the rise, as shown by the uptick in the SME Lending Thermometer score to 5.6 for the second quarter of 2025. Brokers are witnessing a higher demand for finance, with 41% perceiving it as high. Mainstream banks are seen as pulling back from SME lending, prompting more brokers to recommend alternative financing options.

iwoca’s Chief Commercial Officer, Colin Goldstein, notes a significant shift towards alternative lenders for quick and flexible funding as traditional banks struggle to meet the evolving needs of small businesses. The research, based on 2,511 unsecured finance applications, highlights the changing landscape of SME finance, with brokers guiding clients towards non-bank lenders for larger loan amounts.

The SME Expert Index report indicates a growing preference for alternative financing among UK SMEs, with brokers seeing a shift away from traditional banks. The data reflects a changing dynamic in the lending market, with small businesses increasingly seeking faster and more flexible funding options.

Read more at Yahoo Finance: UK SMEs increasingly opt for alternative financing over traditional banks: iwoca