Seeing the bigger picture: Why SME finance is only part of the story – McDermott

After analysis of Millbrook Business Finance’s recent survey, we can see that more than a third of small and medium-sized businesses view this as their biggest challenge, with almost four in 10 saying easier finance would be the most helpful support right now.

Yet the same survey also reveals that finance is far from the only concern. Rising operational costs, wider economic uncertainty, late payments, high taxes, recruitment difficulties and regulation all paint a picture of businesses facing multiple pressures at once. For me, this matters, because it shows that while lending is central, it is only part of a wider story.

Lending volumes on the rise

Figures from UK Finance suggest that finance is indeed becoming more available. Gross lending to SMEs reached £4.24bn in the second quarter of 2025, an increase of 8% on the same period last year. Approvals also climbed, with the number of new facilities up by 7% and the value of approvals rising by 11% year-on-year.

Among the smallest firms, the uplift has been even more pronounced. Lending to businesses with turnover below £2m jumped by 28%, with both loan volumes and values recording double-digit increases. These are precisely the businesses that have often struggled most to access finance and their renewed engagement is certainly a welcome sign that confidence isn’t just restricted to larger or more established companies.

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Even so, the contrast with Millbrook’s findings is striking. If lending is on the up, it begs the question: why do so many firms still feel locked out? The answer, I believe, lies not in the quantity of lending but in its quality. The real questions we should be asking are how quickly facilities are being approved and how fairly they are being priced. Not to mention if these terms genuinely reflect the challenges SMEs are facing day to day.

Pressures feeding into demand

Late payments are one example. From the Millbrook research, 13% of firms said this is their biggest challenge, and 16% highlighted faster payments as the definitive measure that would help most. It’s obvious that when income is delayed, cash flow dries up, and borrowing becomes an absolute necessity rather than a choice. Facilities that are slow to approve or might be overly restrictive simply do not solve this underlying problem.

Tax and labour costs add to this too. 11% of businesses highlighted high taxes, while 7% pointed to recruitment and retention. These issues are usually well away from the headlines, yet their financial impact is felt significantly. Rising wage bills, higher training costs and squeezed profitability all create a need for working capital or longer-term investment. Lending can provide that support, but only if it is structured with enough flexibility to match volatile cash flow.

The limits of finance

It is important to clarify that finance cannot resolve every issue that SMEs face. Tax obligations will remain, regulatory frameworks will update and labour shortages cannot be solved overnight. But what lending can do is provide some headroom, giving businesses the time and space to manage these pressures without curtailing their growth.

This is precisely where brokers make all the difference. By understanding that finance requests often originate from broader operational challenges, they can help shape facilities that meet the real need. Whether it is a business borrowing to cover recruitment costs or to offset late payments, the broker’s role is to interpret, advise and guide their clients towards lenders who can respond appropriately.

Brokers at the centre

The increase in lending shows that appetite certainly exists within the market. But SMEs are still asking for fairer rates, quicker approvals and simpler terms. Brokers are the ones who can connect the two sides by taking businesses with complex needs and matching them with lenders that are willing and able.

For smaller SMEs in particular, where the growth in lending has been strongest, this guidance is crucial. Many owners will remain cautious and may be unsure about committing to new borrowing. But brokers can help them understand which lenders are offering genuine support and how facilities can best be structured.

A market pulled in two directions

What I take from the data is a market that is moving in two directions at once. On the one hand, lending is rising and smaller firms are beginning to re-engage. On the other, many businesses still feel constrained by cost pressures, late payments and tax burdens.

Finance may be the headline issue, but it is the wider context that truly shapes demand. And without brokers to interpret that context, many SMEs would simply struggle to move in the right direction.