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BoE: SME borrowing at four year high but firms taking out loans "is about keeping the lights on"

ended 01. September 2025

Business owners and finance experts have said the four-year high in SME loan finance “is about keeping the lights on” rather than companies looking to grow. This follows new Bank of England data published today showing the annual growth rate of borrowing by SMEs increased from 0.3% to 0.9% in July, the highest since August 2021 (1.3%).

Jon Maloney, Founder at Milton Keynes-based Century Business Finance commented: “Given the pressure SMEs have been under in the past 12 months, I think it’s safe to say that the borrowing figures we’re seeing are primarily being driven by cash flow, or rather the lack of it.

"Confidence remains low in terms of recruitment and investment due to uncertainty created by the government. Hopefully they’ll finally realise come the budget that you cannot keep hammering businesses and expect growth.”

Pete Mugleston, Mortgage Advisor & Managing Director at Derby-based onlinemortgageadvisor.co.uk, was also sceptical: “SME borrowing is at a four-year high, but the wider data suggests it’s more about survival than confidence. Inflation is still running at 3.8%, growth is flat, and insolvencies remain elevated, so many firms are borrowing to cover costs rather than to expand. Some will be investing, but for a lot of small businesses, this is about keeping the lights on. Unless demand strengthens, today’s borrowing risks turning into tomorrow’s debt problem.”

Marcus Wright, Managing Director at Bolton-based Bolton Business Finance commented: “It's not surprising that SME borrowing is at its highest level for four years. We are still seeing a healthy mixture of business finance enquiries for both cash flow purposes but also for investment and growth. Sectors such as retail and hospitality seem to be particularly struggling with cash flow at the minute after recent tax rises and continuing inflation. Demand for invoice finance is also very high at present, as businesses look to unlock unpaid invoices.”

3 responses from the Newspage community

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Pete Mugleston
Mortgage Advisor & Managing Director at onlinemortgageadvisor.co.uk
SME borrowing is at a four-year high, but the wider data suggests it’s more about survival than confidence. Inflation is still running at 3.8%, growth is flat, and insolvencies remain elevated, so many firms are borrowing to cover costs rather than to expand. Some will be investing, but for a lot of small businesses, this is about keeping the lights on. Unless demand strengthens, today’s borrowing risks turning into tomorrow’s debt problem.
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Jon Maloney
Founder at Century Business Finance
Given the pressure SMEs have been under in the past 12 months, I think it’s safe to say that the borrowing figures we’re seeing are primarily being driven by cash flow, or rather the lack of it. Confidence remains low in terms of recruitment and investment due to uncertainty created by the government. Hopefully they’ll finally realise come the budget that you cannot keep hammering businesses and expect growth.
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Marcus Wright
Managing Director at Bolton Business Finance
It's not surprising that SME borrowing is at its highest level for four years. We are still seeing a healthy mixture of business finance enquiries for both cash flow purposes but also for investment and growth. Sectors such as retail and hospitality seem to be particularly struggling with cash flow at the minute after recent tax rises and continuing inflation. Demand for invoice finance is also very high at present, as businesses look to unlock unpaid invoices.