Allica Bank’s lending to established small firms generated £5.8 billion for UK GDP last year, according to a new report.

A study by Oxford Economics has detailed the scale of Allica Bank’s economic impact, showing the challenger’s lending supported more than 84,000 jobs in 2024 and delivered £1.4 billion in tax revenues. The findings, commissioned by Allica, underline the growing role of specialist lenders in the small business finance market.

ECONOMIC FOOTPRINT

The report highlights the contribution of Britain’s established SMEs – firms employing between five and 250 people – which account for more than a third of total employment and turnover. Many have long argued that access to finance from the major banks has been inconsistent, creating opportunities for newer entrants.

Oxford Economics calculates that for every £1 million lent by Allica, £2.4 million is added to GDP, 35 jobs are supported and £600,000 is generated in tax revenue. The bank’s total footprint of £5.8 billion comprises £2.2 billion in direct contributions, £1.8 billion through supply chains and £1.8 billion induced through employee spending.

Allica has expanded quickly since launching five years ago. From its first loan in March 2020, the bank passed £3 billion in cumulative lending at the end of 2024 and says it has already exceeded £3.5 billion this year, having originated more than £1.5 billion in loans last year.

The economic impact was spread nationwide. Nearly 10,000 supported jobs were in the North West, 8,900 in the West Midlands and 7,700 in the East Midlands. As a share of regional employment, the largest contributions were recorded in Wales and the North East.

Richard Davies, chief executive of Allica Bank, said: “Established SMEs are the engine of Britain. Yet for too long they’ve been underserved by the incumbent banks and I’m delighted to see this change as challengers like Allica support them in ways which really make a difference.

“Every £1 million in lending issued by Allica enables our established SME customers to contribute £2.4 million to UK GDP, provide 35 jobs and £600,000 in tax revenue. That’s a direct impact – creating jobs, unlocking investment and helping power growth across all corners of the country.”

SHIFT IN SME LENDING

The report comes at a time of ongoing debate about access to finance for smaller firms. Allica’s own research suggests that many SMEs still hold deposits in zero-interest accounts, while larger corporates are routinely offered higher savings rates by big banks. It estimates that about £9 billion in interest is lost each year as a result.

The lender has also pointed to a £65 billion SME lending shortfall, caused by a long-term decline in business lending from the major banks. In contrast, the British Business Bank has reported that more than 60% of SME lending now comes from challenger or specialist banks – the highest share on record.

Challenger banks say their technology, faster decision-making and relationship-led approach have helped them fill gaps left by the high street. Allica plans to double the size of its relationship manager network this year.