UK SMEs Face Tougher Lending Criteria in 2025

15/03/2025

Small and medium-sized enterprises (SMEs) across the UK are facing increasing challenges when it comes to securing business finance. With economic uncertainty continuing into 2025, many traditional lenders are tightening their criteria, making it harder for businesses to access funding.

Several high street banks have recently updated their lending policies, requiring businesses to demonstrate stronger financial performance and provide additional security before approving loans. This shift is partly due to ongoing inflation concerns and a more cautious approach from financial institutions following recent market fluctuations.

According to industry reports, SMEs in sectors such as retail, hospitality, and construction are experiencing the greatest difficulties in securing loans. Many businesses are now exploring alternative finance options, including peer-to-peer lending, invoice finance, and unsecured business loans, to bridge funding gaps.

With stricter lending criteria expected to remain in place throughout 2025, experts recommend that SMEs focus on improving their credit profiles, maintaining strong cash flow management, and exploring multiple funding options to enhance their chances of securing finance. At Vero Finance, we specialise in helping businesses navigate these challenges by providing access to a broad network of lenders. Whether you're looking for an unsecured loan, working capital finance, or asset-backed lending, we can help identify the best solutions tailored to your business needs.