Adding value and cutting costs will be key commercial lending trends – Renwick

The story of 2025 was rarely a straightforward one.

While many brokers reported a degree of caution among SME clients, particularly in the run-up to the Budget, this was far from universal. Instead, we saw demand prove highly selective, with sustained interest coming through in specific parts of the market rather than across the board. 

Sectors including hospitality, manufacturing, warehousing, and wholesale continued to exhibit a consistent appetite for borrowing. These entities represent asset-backed, operationally robust businesses, frequently characterised by well-defined long-term strategies – and it is notable that confidence within these subsectors held firm despite a challenging backdrop. 

Atom Bank broke its own monthly and quarterly records for the value of commercial mortgage offers in the final quarter of the calendar year, which underlines that demand has not disappeared; rather, it has become more focused and strategic. 

That selectivity is certain to remain a defining feature of the market in 2026, rendering broad generalisations about ‘business confidence’ obsolete. Instead, lenders and brokers must develop a more granular understanding of how different subsectors are definitively responding to economic pressures, and where concrete opportunities lie. 

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Debt as a value-enhancing tool 

I believe a recalibration is underway regarding how SMEs perceive the utility of debt. In 2026, we look to be moving past the era where borrowing was synonymous with distress or mere survival. Instead, businesses are likely to increasingly deploy leverage as a proactive tool for value creation – financing the acquisition of prime assets, driving operational efficiencies, or executing aggressive growth strategies. 

Many businesses that first engaged with significant external finance through either the Coronavirus Business Interruption Loan Scheme (CBILS) or Bounce Back Loan Scheme (BBLS) have effectively successfully ‘graduated’ from those obligations. Having successfully navigated and serviced that debt, the historical stigma often associated with borrowing has evaporated – with a previous wariness of leverage being replaced by a sophisticated understanding of debt as a standard component of an efficient capital structure. 

With debt costs easing and capital values finding stability after a period of volatility, borrowing has resumed its role as a constructive engine for strengthening balance sheets. 

Managing costs through smarter property decisions 

Alongside the desire to add value, cost control is an equally powerful driver of commercial borrowing decisions. We are already seeing evidence of a flight to quality within the commercial property market, and this trend looks set to intensify. 

In our experience, rising energy costs have been a major catalyst. For many businesses, energy expenditure has shifted from being a background consideration to a pressing concern, directly affecting profitability. As a result, demand for energy-efficient buildings is growing, not only for ESG reasons, but because of the tangible financial benefits they offer over the life of the asset. 

This dynamic is also influencing lending structures, with borrowers increasingly seeking finance that supports investment in higher-quality, more efficient premises. 

Taxation is another important factor. The business rates revaluation that came into force in April will result in higher average rateable values, with sectors such as logistics and hospitality particularly exposed. For some occupiers, this may prompt a reassessment of their property footprint. Moving to smaller, high-specification premises with lower ongoing liabilities may prove a more effective way to protect margins than absorbing higher fixed costs in legacy buildings. 

The importance of sector understanding and flexibility 

All of this reinforces the need for lenders to avoid treating commercial borrowers as a homogenous group. The financing requirements of a logistics operator differ markedly from those of a hospitality business or a light manufacturer, even if the loan size and asset value appear similar on paper. 

For brokers, this means working with lenders that can demonstrate genuine sector expertise and a willingness to apply flexibility where appropriate.

For lenders, it requires a deep understanding of how different industries generate cash flow, manage costs and respond to external pressures. 

As borrowing decisions become more strategic, pricing and structure matter more than ever. Deals that accurately reflect the underlying risk and the realities of the borrower’s sector are more likely to succeed, while one-size-fits-all approaches risk frustrating both brokers and clients. 

This year, the commercial lending market is unlikely to be defined by a single narrative. Instead, I believe it will be shaped by a combination of value-driven investment, cost-conscious decision-making and increasingly informed borrowers. Those who recognise this complexity, and respond with sector insight and flexibility, will be best placed to support the next phase of SME growth.