SMEs continue to drive asset finance demand despite economic uncertainty – Thompson

It shows that asset finance new business grew 14% in April and was 6% higher in the first four months of the year compared to the same period last year. It’s further evidence of the resilience of UK businesses and the continued appetite for flexible funding solutions.

New lending to SMEs in particular increased by 8% year-on-year, highlighting the critical role alternative finance continues to play in helping smaller businesses invest with confidence despite ongoing economic uncertainty.

As an SME funding provider, the figures certainly mirror what we are seeing on the ground at Asset Advantage.

In truth, the results are particularly encouraging given the wider backdrop of geopolitical instability and persistent economic pressure facing UK businesses of all shapes and sizes.

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The wider context

The ongoing conflict in Iran, combined with inflationary concerns and continued pressure on operating costs, has understandably made many businesses cautious about large-scale expenditure.

Naturally, there will be those writing off smaller businesses or underestimating their appetite and willingness to grow. However, this latest data once again proves that SMEs are still willing to invest where finance options remain accessible, flexible and aligned to their operational needs.

This growing demand for asset finance reflects a wider trend seen across the SME lending market. Businesses are increasingly prioritising funding solutions that allow them to safeguard working capital while continuing to invest in machinery, equipment and facilities to support productivity and long-term growth.

A good example is funding for plant and machinery, which recorded particularly strong growth during the period. This suggests many SMEs remain focused on investing in efficiency, productivity and operational improvements in the current climate.

SMEs play a significant role

Importantly, this latest dataset reinforces the increasing role smaller SMEs are playing in driving this momentum in the market. This certainly mirrors the latest UK Finance Business Finance Review, which highlighted continued borrowing demand from smaller firms despite challenging trading conditions.

For many SMEs, access to finance is not just essential for expansion, but critical for maintaining competitiveness and operational resilience. Alongside business loans, asset finance has become a vital tool for businesses looking to spread costs, manage cash flow and invest without placing undue strain on liquidity.

Ongoing challenges

However, while the overall figures paint a positive picture, there is still an ongoing challenge within the market: many SMEs and commercial finance brokers continue to face barriers when approaching larger, mainstream funders.

Despite strong demand, approval processes and risk appetite at more traditional funders remains restrictive, particularly for businesses with complex trading histories, non-standard circumstances or those operating in sectors perceived as higher risk. In many cases, otherwise viable businesses are struggling to secure the support they need through conventional funding channels.

This is where specialist and agile lenders are continuing to demonstrate their value.

Unlike larger institutions that often rely heavily on rigid underwriting processes and criteria, specialist funders are typically able to take a more holistic view of both the application and the business behind it. That flexibility allows good businesses to get a fair hearing and support deals that may otherwise fall outside traditional lending parameters – all while maintaining responsible lending practices.

For commercial finance brokers, this approach is becoming really important. Brokers are under growing pressure to deliver funding solutions quickly and efficiently for clients operating in a rapidly changing environment. Having access to specialist funders who are pragmatic and capable of people-driven decision-making can be the difference between a deal completing or collapsing altogether.

Encouragingly, the resilience of the asset finance sector itself continues to provide confidence to businesses seeking funding. During periods of real uncertainty, the market has continued to adapt and offer flexible structures that help businesses prioritise investment even when confidence more broadly is softer.

Looking ahead, economic headwinds are unlikely to disappear in the short term.

Even if the conflict ends tomorrow, geopolitical tensions, inflationary pressures and broader market uncertainty will continue to shape business sentiment throughout 2026 and beyond. However, this latest data and our view on the ground continue to suggest that where accessible funding is available, SMEs are still prepared to invest in their future.

For specialist funders such as Asset Advantage, there’s a clear opportunity and responsibility to continue supporting SMEs and brokers with pragmatic, relationship-led funding solutions that enable growth, even as businesses navigate uncertainty. As demand for flexible finance remains robust, specialist funders will continue to play a crucial role in ensuring SMEs can access the support they need when mainstream lending avenues fall short.