Business finance loans are a common means of obtaining extra capital for a company to invest and grow. These loans can be tied to an asset or unsecured, with particular features of the loan shifting according to trends in the business finance loans market.

Knowing when to seek a loan

An increase in fixed-rate borrowing by small and medium-sized businesses (SMEs) may be due to businesses’ desire to avoid the impact of expected interest rate increases and ensure the availability of funding.

In the UK, fixed rate borrowing taken out by SMEs has increased 8% in 2018 to £28.7bn (year-end 31st December), up from £26.5bn in 2017. Meanwhile, floating rate borrowing by SMEs has fallen over the same period to £137.1bn, down from £138.9bn.

In 2019 a financial support package for small to medium-sized business (SMEs) was launched by government body UK Export Finance.

Government initiatives

The government said it is the first time such an extensive financing package has been made available to small businesses exporting to fast-growing emerging markets from the UK.

The package will include:

The Small Deal Initiative – to back the army of exporters undertaking the smaller contracts that underpin British trade

Extending financial support to firms in exporters’ supply chains as well as exporters themselves

The General Export Facility – covers general costs for exporters, rather than just costs related to a specific export deal.

Caution in markets

Banks are shifting towards less-risky wholesale business lending, with a 48% jump in lending to leasing providers in just the last year, according to data from the Bank of England (BoE).

Data from the BoE shows that lending to leasing providers increased from £32.7bn in December 2017 to £48.5bn in December 2018.

Debt advisory firm Hadrian’s Wall Capital believes that some banks are becoming increasingly worried about the possibility of rising defaults in their loan books, which has led them to shift their exposures to wholesale finance by lending to larger leasing businesses.

The risk in bank loan books has already been under scrutiny in recent months: in January Metro Bank said that it had under-reported the risk of some of its commercial property lending.


Business finance loans can be an integral part of a commercial operation, though in light of oscillating market conditions companies are advised to look outside of traditional high street lenders to specialist financial services. As well as institutions that may be willing to provide competitive rates and more personal customer experience, they can offer a specialist product that is more flexible than what can be found in more traditional areas of finance.

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