This article was originally published The Intermediary on the 21 October 2026
UK Finance’s latest Business Finance Review shows that gross lending to small and medium-sized businesses reached £5.35 billion in the second quarter of 2026, the highest quarterly figure since the pandemic and more than 26% higher than the same period last year.
That follows an already strong first quarter, when SME lending rose 16% year on year to £5.3 billion.
That growth has come despite a difficult backdrop, with ongoing geopolitical uncertainty, inflationary pressure and higher operating costs. Smaller businesses have understandably become more cautious, but demand from medium-sized firms has remained resilient.
But uncertainty does not mean businesses stop investing. We continue to see established firms looking to acquire, improve existing premises, refinance debt or release capital to support their next stage of growth.
Finance can create room to invest
A recent hotel refinancing provides a useful example. An experienced operator needed to refinance existing borrowing across two owner-operated hotels while releasing additional capital from the properties.
What made the transaction interesting was not simply the refinancing requirement, but what sat behind it. One of the hotels had received a positive pre-application response for a significant redevelopment that could almost double its number of bedrooms, alongside improvements to its conference and wedding facilities.
That is why refinancing is not always simply about replacing one facility with another. For established businesses, it can release capacity to invest, adapt and move forward.
For me, that means looking beyond whether a transaction simply fits a set of criteria. You need to understand the business, the assets supporting the borrowing and, importantly, what the customer is trying to achieve.
Medium-sized businesses need lenders that can respond
That need to look beyond the headline numbers becomes particularly important when lending to medium-sized businesses. These are often established firms with strong management teams, valuable assets and clear investment plans, but their borrowing requirements can also be larger and more involved than those of smaller companies.
That may mean several properties, different income streams, group structures or a requirement to refinance and release capital as part of the same transaction. These cases therefore require lenders that are prepared to spend time understanding them.
Technology can make the process quicker and improve access to information, as I have argued before, but it cannot replace commercial judgement. Technology and good data absolutely help, but they do not replace commercial judgement. Good lending still comes down to understanding the business and assessing each case on its merits.
The latest UK Finance figures show that there is still a healthy appetite for finance, particularly among established medium-sized businesses. But borrowers are understandably being selective about when and why they take on additional debt.
That creates an important role for specialist lenders. We need to understand the rationale for the borrowing, what the business is trying to achieve and whether the proposed structure genuinely supports those plans.
Where the underlying business is sound and the rationale makes sense, the right funding can do far more than solve a short-term requirement. It can give a business the flexibility and capital to make its next move.
