UK SMEs are increasingly choosing alternative financing towards traditional banks: Iwoca

The latest studies carried out by the British business loan IWOCO has highlighted an increase in the number of small and medium-sized companies (SMEs) that select alternative lenders compared to conventional high street banks.

The data collected from the IWOCO SME expert index show that financial brokers are now likely to submit credit applications for alternative financial providers. 61% state that more than half of their loan registrations were non-bank creditors last month.

The shift of the preference is largely due to the need to accelerate decision -making processes, as reported by 73% of the brokers.

This marks an increase of 63% in the previous quarter.

The SME Lending Thermometer, a measure that was introduced in early 2025 to measure the demand for SME financial means, recorded a score of 5.6 for the second quarter of 2025.

This number of points is a slight increase in 5.23 of the previous quarter, which indicates an incremental increase in the financing of SMEs.

The score of the thermometer is calculated from the broker feedback, which is currently indicating that 41% of the brokers perceive a high financial requirement, while only 26% consider demand to be below average.

In addition, research on a growing perception of the brokers indicates that mainstream banks withdraw from the SME credit market, with 71% matching this trend.

As a result, brokers increasingly recommend alternative financing options for their customers, especially for loan amounts of more than 100,000 US dollars. 65% of the brokers lead SMEs in this direction.

IColin Goldstein, Chief Commercial Officer from Woca UK, said: “We are at a real turning point for SME financing. More than ever, small companies need quick and flexible financing, and they are increasingly turning to alternative lenders to get it.

“The pace of this shift shows how many traditional banks have difficulties to live up to the changing needs of the small companies of the UK.”

The results of the SME expert index are based on a survey in which 83 brokers are involved who submitted a collective in Great Britain in December and January a total of 2,511 unsecured financial applications for their SME customers in Great Britain.

“SMEs in Great Britain are increasingly opting for alternative financing against traditional banks: Iwoca” was originally created and published by Live leasinga brand of globaldata.

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