Ask a room of business owners to name five commercial lenders and most will stall after their own bank and a couple of names they’ve seen advertised. But this is nothing to be embarrassed about. The UK lending market has become so crowded that even finance professionals struggle to keep track of who lends what, to whom, and on what terms.
So more business owners are now handing that legwork to an intermediary, and the figures suggest it’s fast becoming the default route, not as we might expect, the exception. Let’s get into what’s driving that, starting with just how many lenders you’d now need to know to shop the whole market yourself.
Fifty lenders deep: The market owners can’t see
The British Business Bank’s latest Small Business Finance Markets report puts gross SME bank lending at £68bn for 2025, up 9% on the year before. The more telling figure is who provided it. Challenger and specialist banks accounted for 60% of gross bank lending to SMEs (excluding overdrafts), up from 39% in 2012, and once non-bank lenders are counted, 68% of all SME lending came from outside the big five high street names.
Since 2013, 28 new providers have entered the small business banking market alone. Add specialist property lenders, asset finance houses and invoice finance providers, and the realistic shortlist for a single deal can run well past fifty names. Yet the same report found nearly 4 in 10 smaller businesses still don’t know where to find information on the different types of finance available. The best-priced lender for a given deal will often be one the owner has never heard of.
Hard searches can sink a deal before it starts
Most full applications will leave a hard search on the business’s credit file, and often on the directors’ personal files too. One is harmless. Four or five inside a month will read as distress to the next underwriter, and plenty of owners have learned this the painful way, watching their options narrow with each fresh application.
This is where the intermediary model enters this complex picture. A commercial finance broker will typically sound out lenders through soft searches first, placing the full application only once a lender has confirmed genuine appetite for the deal. The borrower’s file ends up carrying one hard search instead of half a dozen, and the application lands with a lender already inclined to say yes.
One conversation, not fifty
Going to funders one by one is a job in itself. Each lender will want its own forms, its own spread of accounts, bank statements and forecasts, and each can take days or weeks to come back. For an owner already running payroll, staff and customers, that process can swallow a quarter of a year.
The market has voted with its feet. The National Association of Commercial Finance Brokers reports its members arranged £33bn of SME lending in 2025, up 25% year on year, across roughly 180,000 loans, and it puts the whole broker-led market at around £50bn annually. In 2025, its chief executive, Jim Higginbotham, declared “the future belongs to relationship-led lending,” and lenders appear to agree, attributing around two thirds of their SME completions to broker channels on average.
Sectors most lenders secretly avoid
Some owners don’t struggle to choose between fifty lenders. They struggle to find three who will quote at all. Hospitality, care, construction and anything with volatile card takings will trigger an automatic decline at plenty of mainstream lenders, whatever the accounts say. The owner never learns why, only that the answer was no.
Brokers deal with this daily. In the NACFB’s latest market data, a quarter of businesses funded through its members had already been declined elsewhere, which tells you how much appetite varies between lenders for the exact same deal. The specialist lenders who actively want a pub freehold or a care home on their books do exist. They just don’t have branches on the high street, so you’ll rarely stumble across them on your own.
What this means if you’re borrowing this year
If you’ll be raising finance in the coming months, treat lender choice as the decision that shapes everything else. Before you apply anywhere, ask what kind of search the lender will run and get the answer in writing. If you’d rather shop the market yourself, keep a record of every search on your file and space applications out.
And if the deal is urgent, complicated or in a sector lenders tend to swerve, the maths will usually favour paying someone who already knows which fifty doors are open. The gap between the best and worst offer on the same deal is often wider than any broker’s fee, and that, more than anything, is why this trend will keep climbing.
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