More than half of commercial mortgage brokers are reporting increased demand for business borrowing, according to Atom bank’s latest SME Pulse survey, despite the ongoing challenges facing the UK economy.
The quarterly poll of brokers, conducted by the digital challenger bank, revealed that 53% had seen growing appetite for funding among their SME clients in the first quarter of 2025. Although slightly lower than the 56% recorded in the previous quarter, the latest figures suggest continued resilience among businesses seeking external finance.
Only 3% of brokers reported a fall in borrowing appetite, while the number seeing no change rose to 44%, an increase of 5% compared to the last survey. Atom bank, the UK’s highest rated residential mortgage lender and savings bank on Trustpilot, noted that lower interest rates have become an increasingly significant driver of demand. More than half (57%) of respondents cited the reduced cost of borrowing as the primary reason for the uptick in applications, well ahead of other factors such as greater lender appetite (32%) and growing business confidence (30%).
Property purchase remains the most common reason for borrowing, though its share fell to 51%, down six points from the previous survey. In contrast, refinancing of existing debt rose by 6% to 24%, and borrowing for growth and expansion increased by 5% to 23%.
In a new addition to the survey, brokers were asked to comment on trends in specific commercial sectors. Those active in the modern industrial sector reported that rising energy costs and supply chain disruptions were having a notable impact, with 40% saying their clients had been affected. By comparison, 31% reported no significant impact.
Meanwhile, in the food and hospitality sector, more than two-fifths of brokers observed either stable or rising borrowing demand. Restaurants and cafes accounted for the greatest share, with 29% of advisers noting increased demand, ahead of 20% for pubs and bars, and 13% for food manufacturing.
Access to funding also appears to be improving. Fewer than one in four brokers said they were struggling to secure finance for their clients, a notable improvement from the position throughout much of 2024 when around one in three faced difficulties. Brokers attributed this shift to a broader range of lenders and a general increase in lending appetite.
Tom Renwick, head of business lending at Atom bank, said: “It’s enormously encouraging that so few brokers in our latest SME Pulse are reporting a drop in demand from their business clients, despite the various economic headwinds they have faced at the start of 2025. This shows the level of confidence among British businesses at the moment, and suggests they believe this is the right time to raise the funds needed to support their growth plans. It will be interesting to track whether the introduction of trade tariffs by the US, and the subsequent market turmoil, has any impact on their plans in future editions of the Pulse survey.
“It’s also good to see that access to funding is becoming easier. While it’s disappointing that a quarter of brokers are experiencing issues in securing the funds their clients need, the sharp drop reported from Q4 2024 suggests that lender appetites are improving.
“It remains crucial for lenders to adapt their propositions to better suit the needs of business borrowers where possible. We’ve had a tremendous response to our introduction of a simplified stressed interest rate on commercial lending, a move that opens up the potential for businesses to access larger loan amounts. If businesses are to capitalise on the opportunities open to them, then they need more tangible support from commercial lenders.”
The SME Pulse will continue to monitor trends among brokers throughout 2025, offering a window into the health and outlook of the small business finance market.
