Atom Bank’s quarterly SME Pulse Survey showed that this was a slight fall from 56% in the prior quarter but that the proportion of advisers who reported a reduced borrowing appetite for SME clients fell to around 3%.
The report added that the proportion of advisers who said demand for borrowing from SME clients was unchanged during the period was 44%, a rise of 5% on the prior quarter.
Within the adviser segment reporting a rise in borrowing appetite from SME clients, lower interest rates were a key catalyst, with 57% pointing to the reduced cost of borrowing as the reason for growing commercial finance appetite.
Nearly a third – 32% – said there was greater appetite from lenders and 30% said improving business confidence was a factor.
Property purchase is the primary reason for borrowing, at 51%, while refinancing existing debt came to 24% and growth and business expansion was cited by around 23% of advisers.
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Two-fifths of brokers said that in the modern industrial sector, rising energy costs and supply chain disruption were impacting their clients. Nearly 21% said they had seen no such impact on their clients.
Within food and hospitality, 43% said they had seen unchanged or growing demand from this segment.
Around 29% of brokers said restaurants and cafes were growing areas of demand, ahead of 20% for pubs and bars and 13% for food manufacturing.
Less than one in four brokers said that they were finding it difficult to access funding for their clients, an improvement from around a third in the prior period.
Tom Renwick, head of business lending at Atom Bank, said: “It’s enormously encouraging that so few brokers in our latest SME Pulse are reporting a drop in demand from their business clients, despite the various economic headwinds they have faced at the start of 2025.
“This shows the level of confidence among British businesses at the moment, and suggests they believe this is the right time to raise the funds needed to support their growth plans. It will be interesting to track whether the introduction of trade tariffs by the US, and the subsequent market turmoil, has any impact on their plans in future editions of the Pulse Survey.”
He continued: “It’s also good to see that access to funding is becoming easier. While it’s disappointing that a quarter of brokers are experiencing issues in securing the funds their clients need, the sharp drop reported from Q4 2024 suggests that lender appetites are improving.
“It remains crucial for lenders to adapt their propositions to better suit the needs of business borrowers where possible. We’ve had a tremendous response to our introduction of a simplified stressed interest rate on commercial lending, a move that opens up the potential for businesses to access larger loan amounts. If businesses are to capitalise on the opportunities open to them, then they need more tangible support from commercial lenders.”
