UK business lending trends: what is changing in 2025
By Helm, Funding Specialist
- Alternative lending continues to grow faster than bank lending
- Open banking is making applications faster and decisions smarter
- Embedded lending is putting finance at the point of sale
- Revenue-based models are becoming mainstream
- SMEs have more options than ever before
The UK business lending market is undergoing a significant transformation. Technology is reshaping how lenders assess risk, how businesses apply for funding, and how repayments are collected. Understanding these trends helps you make better decisions about your own funding.
This guide covers the most important trends shaping UK business lending in 2025.
The rise of alternative lending
Alternative lenders now account for a growing share of UK small business finance. Driven by faster decisions, higher approval rates, and more flexible products, businesses are increasingly choosing alternative providers over traditional banks.
The trend has accelerated since the pandemic, as businesses discovered that speed and accessibility matter as much as cost when it comes to funding.
Open banking transformation
Open banking is arguably the most significant technological change in UK business lending. By allowing lenders to access real-time financial data with the borrower's consent, it eliminates the need for manual document uploads and enables faster, more accurate assessments.
For businesses, this means quicker applications, faster decisions, and offers based on real performance data rather than historical credit scores.
Revenue-based lending goes mainstream
Revenue-based lending models, where repayments are tied to your actual business revenue, are moving from niche to mainstream. Merchant cash advances pioneered this approach, and now a range of revenue-based finance products are available.
The appeal is clear: repayments that flex with your business performance protect your cash flow and reduce the risk of default.
Embedded lending
Embedded lending, where finance is offered at the point of sale or within existing business tools, is an emerging trend. Card terminal providers, accounting software, and ecommerce platforms are all beginning to offer integrated lending.
This means you may soon be offered funding directly through your card terminal provider, your accounting software, or your ecommerce dashboard, making access even simpler.
What this means for your business
These trends are positive for UK businesses. More competition means better terms. More technology means faster access. And more flexible products mean lending that works with your business rather than against it.
The key is to stay informed, compare your options, and choose the product and provider that genuinely fits your needs.
Frequently asked questions
Will banks become irrelevant for business lending?
No. Banks will continue to serve larger businesses and those with strong credit profiles. But their share of SME lending is likely to continue declining as alternatives grow.
Is alternative lending sustainable?
Yes. The UK alternative lending market is now mature, with established providers, proven models, and growing investor confidence.
How will open banking affect my business?
It will make applying for lending faster and simpler. Instead of uploading bank statements, you can share your financial data securely in seconds.
Should I wait for better options or borrow now?
If you need funding now, do not wait. The market will continue to evolve, but current options are already competitive and well-suited to most business needs.