UK SME funding gap statistics 2026
There is no official measure of the UK SME funding gap, so we don't quote one. What is measured is bank lending to SMEs and what it costs. The main high street banks lent £17.5 billion to SMEs in 2025, up from £16.1 billion in 2024 (UK Finance). In September 2026 the average rate on a new bank loan to an SME was 6.55%, against 5.47% for all businesses (Bank of England). The UK has 5.6 million private sector businesses, and almost all of them are SMEs.
Key figures
Private sector businesses in the UK at the start of 2026. 99.85% of them are small or medium-sized (SMEs, up to 249 employees). Source: Department for Business, Innovation, Science and Trade, Business Population Estimates 2026
People working for UK SMEs at the start of 2026, 60% of private sector jobs. Source: Department for Business, Innovation, Science and Trade, Business Population Estimates 2026
Yearly turnover of UK SMEs at the start of 2026, 50% of private sector turnover. Source: Department for Business, Innovation, Science and Trade, Business Population Estimates 2026
SMEs in construction at the start of 2025, 16% of all SMEs. Construction has more SMEs than any other industry. Source: Department for Business and Trade, Business Population Estimates 2025
Gross lending to SMEs by the main high street banks in 2025, up from £16.1bn in 2024. Source: UK Finance, SME lending press release, 12 March 2026
Rise in high street bank lending to small businesses (turnover up to £2m) in 2025. Lending to medium-sized businesses rose 4%. Source: UK Finance, SME lending press release, 12 March 2026
Net borrowing by SMEs in September 2026, unchanged from August. Source: Bank of England, Money and Credit September 2026 (published 29 October 2026, read 3 November 2026)
Annual growth rate of borrowing by SMEs in September 2026, up from 4.7% in August. For large businesses it was 11.7%. Source: Bank of England, Money and Credit September 2026 (published 29 October 2026, read 3 November 2026)
Average interest rate on new bank loans to SMEs in September 2026, down from 6.63% in August. The average for new loans to all businesses was 5.47%. Source: Bank of England, Money and Credit September 2026 (published 29 October 2026, read 3 November 2026)
Invoice finance and asset-based lending that UK Finance members provide at any one time. Source: UK Finance, invoice finance and asset-based lending
| Figure | Value | Source |
|---|---|---|
| Private sector businesses in the UK at the start of 2026. 99.85% of them are small or medium-sized (SMEs, up to 249 employees). | 5.6 million | Department for Business, Innovation, Science and Trade, Business Population Estimates 2026 |
| People working for UK SMEs at the start of 2026, 60% of private sector jobs. | 17.0 million | Department for Business, Innovation, Science and Trade, Business Population Estimates 2026 |
| Yearly turnover of UK SMEs at the start of 2026, 50% of private sector turnover. | £2.78 trillion | Department for Business, Innovation, Science and Trade, Business Population Estimates 2026 |
| SMEs in construction at the start of 2025, 16% of all SMEs. Construction has more SMEs than any other industry. | 885,000 | Department for Business and Trade, Business Population Estimates 2025 |
| Gross lending to SMEs by the main high street banks in 2025, up from £16.1bn in 2024. | £17.5bn | UK Finance, SME lending press release, 12 March 2026 |
| Rise in high street bank lending to small businesses (turnover up to £2m) in 2025. Lending to medium-sized businesses rose 4%. | more than a quarter | UK Finance, SME lending press release, 12 March 2026 |
| Net borrowing by SMEs in September 2026, unchanged from August. | £1.0bn | Bank of England, Money and Credit September 2026 (published 29 October 2026, read 3 November 2026) |
| Annual growth rate of borrowing by SMEs in September 2026, up from 4.7% in August. For large businesses it was 11.7%. | 5.3% | Bank of England, Money and Credit September 2026 (published 29 October 2026, read 3 November 2026) |
| Average interest rate on new bank loans to SMEs in September 2026, down from 6.63% in August. The average for new loans to all businesses was 5.47%. | 6.55% | Bank of England, Money and Credit September 2026 (published 29 October 2026, read 3 November 2026) |
| Invoice finance and asset-based lending that UK Finance members provide at any one time. | over £20bn | UK Finance, invoice finance and asset-based lending |
Source: Department for Business, Innovation, Science and Trade (Business Population Estimates 2026), Department for Business and Trade (Business Population Estimates 2025), UK Finance, Bank of England
View as plain-text Markdown
### UK SME funding gap statistics 2026: key figures | Figure | Value | Source | | --- | --- | --- | | Private sector businesses in the UK at the start of 2026. 99.85% of them are small or medium-sized (SMEs, up to 249 employees). | 5.6 million | Department for Business, Innovation, Science and Trade, Business Population Estimates 2026 | | People working for UK SMEs at the start of 2026, 60% of private sector jobs. | 17.0 million | Department for Business, Innovation, Science and Trade, Business Population Estimates 2026 | | Yearly turnover of UK SMEs at the start of 2026, 50% of private sector turnover. | £2.78 trillion | Department for Business, Innovation, Science and Trade, Business Population Estimates 2026 | | SMEs in construction at the start of 2025, 16% of all SMEs. Construction has more SMEs than any other industry. | 885,000 | Department for Business and Trade, Business Population Estimates 2025 | | Gross lending to SMEs by the main high street banks in 2025, up from £16.1bn in 2024. | £17.5bn | UK Finance, SME lending press release, 12 March 2026 | | Rise in high street bank lending to small businesses (turnover up to £2m) in 2025. Lending to medium-sized businesses rose 4%. | more than a quarter | UK Finance, SME lending press release, 12 March 2026 | | Net borrowing by SMEs in September 2026, unchanged from August. | £1.0bn | Bank of England, Money and Credit September 2026 (published 29 October 2026, read 3 November 2026) | | Annual growth rate of borrowing by SMEs in September 2026, up from 4.7% in August. For large businesses it was 11.7%. | 5.3% | Bank of England, Money and Credit September 2026 (published 29 October 2026, read 3 November 2026) | | Average interest rate on new bank loans to SMEs in September 2026, down from 6.63% in August. The average for new loans to all businesses was 5.47%. | 6.55% | Bank of England, Money and Credit September 2026 (published 29 October 2026, read 3 November 2026) | | Invoice finance and asset-based lending that UK Finance members provide at any one time. | over £20bn | UK Finance, invoice finance and asset-based lending | Source: Department for Business, Innovation, Science and Trade (Business Population Estimates 2026), Department for Business and Trade (Business Population Estimates 2025), UK Finance, Bank of England
About these figures
The sources define an SME in different ways. The business counts use employees (up to 249). UK Finance counts lending by a group of high street banks only, and calls a small business one with turnover up to £2 million. The Bank of England figures are a separate series again. So the figures show the direction of lending, but they don't add up to one total.
Lending from challenger banks, non-bank lenders and invoice finance providers is not in the UK Finance high street figure. We removed an earlier funding gap estimate and bank rejection rates from this page because we could not open a source for them. Many variable business loans are priced as a margin over the Bank of England base rate, which has been 4% since 5 November 2026.
If you can't get a bank loan
- If customers owe you money on invoices, invoice finance lends against those invoices.
- To fund one invoice at a time rather than your whole sales ledger, look at selective invoice finance.
- To check whether you are likely to qualify, see invoice finance eligibility.
- For other kinds of business borrowing, see our guide to business loans.
Questions
What is the SME funding gap?
It is the difference between the finance small businesses need and the finance they can get. It includes businesses that are turned down and businesses that don't apply because they expect to be turned down. There is no official figure for it, because need is hard to measure.
Why do SMEs pay more to borrow than large businesses?
Lenders see smaller businesses as riskier and the loans are smaller, so the cost of arranging each one is higher compared with the amount lent. The Bank of England figures show the gap: 6.55% on new SME loans in September 2026 against 5.47% for all businesses.
Can invoice finance help if the bank says no?
Sometimes. Invoice finance is secured on your unpaid invoices, so the lender looks closely at how reliable your customers are, not only at your own accounts. It only works if you sell to other businesses on credit terms, and most lenders set a minimum turnover.
For more on the size of the UK business population, see our UK business population statistics.
Founder & Managing Director, Muswell Rose, founder and PSC of Best Business Loans Ltd
Adam was managing director of Penny, a UK invoice finance business, from July 2020 to November 2023. His career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library. Career record.
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