Asset finance is set to dominate SME funding demand in the next 12 months, according to new data from specialist lender Asset Advantage.

The survey of commercial finance brokers found that nearly three quarters expect asset finance to lead borrowing requirements from businesses in 2026.

The findings indicate that 72% of respondents believe asset finance will be the strongest area of demand, while one in four brokers said they anticipate notable interest in acquisition and expansion facilities.

By contrast, invoice finance and property-related commercial loans are expected to play a smaller role, selected by 22% and 17% respectively.

The results come amid growing signs that SMEs are prioritising growth-oriented borrowing. Despite ongoing economic pressures, brokers report rising appetite for investment in new equipment and business development, as well as increasing readiness among SMEs to pursue acquisitions.

EVIDENCE OF A TREND

Recent market indicators reinforce the trend. Data from the Finance and Leasing Association shows that total asset finance new business rose 11% in September compared with the same month last year. Figures from the Office for National Statistics reveal that domestic mergers and acquisitions reached £5.3 billion in the third quarter of 2025, nearly £2 billion higher than the previous quarter.

Asset Advantage’s survey also found that nearly 60% of commercial brokers have seen a rise in requests for funding to support business purchases or management buy-outs.

The lender has expanded its product suite in response, adding two dedicated options: a CapEx term loan for non-standard assets, such as specialist equipment, soft assets, fit-outs and refurbishments; and a business acquisition loan designed for clients purchasing a company, completing a partner buy-out or undertaking a management buy-in.

Asset Advantage provides asset finance through hire purchase and finance lease agreements, as well as business loans ranging from £75,000 to £500,000. These facilities can fund both hard and soft assets or support acquisitions, with flexible criteria on asset type and sector where serviceability and risk profile are robust.

Gary Thompson, sales director at Asset Advantage, said: “Commercial brokers are telling us that there is growing momentum among SMEs. Rather than seeking short-term fixes with inappropriate cash-flow loans, they are actively pursuing funding that helps them grow – and asset finance is top of their list in the coming year.

“Alongside this, SMEs are looking to grow through expansion and are therefore prioritising funding for business acquisitions. This certainly mirrors our current business levels and expectations for the year ahead.

“While the findings are certainly encouraging, delivering on this demand relies on flexible, growth-focused funders – those who are willing to understand the business behind the case and ready to support their investment and expansion plans.

“Rather than rigid processes and restrictive appetites, we need an open-minded and pragmatic approach to lending to really give brokers the tools and support they need. As we head into 2026, this remains our priority as we help brokers and their SME clients realise these growth ambitions.”