When NGI Finance opened its doors in 2006, the UK business lending landscape looked very different from the one we operate in today. The high street banks dominated almost entirely. Alternative finance was barely a concept and the idea that a business could secure a loan in hours, entirely online, from a lender that hadn’t existed five years earlier, would have seemed far-fetched.
Twenty years on, the market has been transformed by a financial crisis, a global pandemic, technological change and a wave of new lenders that have fundamentally reshaped how UK businesses access funding. Here’s how the world of business finance has changed since we started out.
The banks had it all their own way
In 2006, if a business needed finance, it went to its bank. The big five high street lenders dominated SME lending almost completely and for most business owners there was little reason, or incentive, to look elsewhere. Relationships were built over years, often with the same branch manager and lending decisions were made locally.
That model started to crack with the financial crisis of 2008. Credit dried up almost overnight. Banks that had been lending freely pulled back sharply and thousands of businesses that had relied on traditional lenders found themselves without options. It was a defining moment and it created the conditions for everything that followed.
The rise of alternative finance
The years after 2008 saw the emergence of an entirely new lending ecosystem. Peer-to-peer lending platforms, challenger banks, specialist lenders and fintech businesses began offering SMEs routes to finance that the high street simply wasn’t providing. When Funding Circle launched in 2010, the UK’s first dedicated peer-to-peer business lending platform, it marked the beginning of a structural shift in the market.
Today, specialist banks account for around 60% of gross SME bank lending, a dramatic reversal from a market they barely participated in twenty years ago. In 2014, challenger banks held just 27% of the market. Their share has more than doubled since then, driven by faster decision-making, better technology and a genuine appetite to serve businesses that traditional lenders had moved away from.
Technology changed everything
In 2006, a business loan application meant paperwork, branch visits and weeks of waiting. Today, the rise of fintech has transformed how lenders assess and approve business finance: many now use open banking data, automated credit scoring and digital underwriting to make decisions in hours (sometimes even minutes). Open banking has become mainstream rather than optional in UK SME lending, with fintech platforms driving much of this shift and businesses that maintain clean, well-organised financial records benefiting from faster, smoother applications.
The result is a market that is faster, more transparent and more accessible than anything that existed when NGI started out. Though it also requires businesses to understand their own financial profile in ways that weren’t previously necessary.
Government intervention reshaped expectations
The pandemic lending schemes of 2020, CBILS and the Bounce Back Loan Scheme, introduced an enormous number of business owners to alternative lenders for the first time. Many of those relationships have endured. The experience also demonstrated that large-scale, rapid deployment of business finance was possible when the infrastructure existed and it accelerated digital lending significantly.
Asset finance came into its own
Asset finance has been one of the quiet success stories of the past two decades. It is estimated that asset finance reached a record £23.5 billion in 2024 and it now accounts for a substantial proportion of all external business lending in the UK.
Asset finance has the highest approval rates of any lending product, 96% of asset finance applications are successful, compared to much lower rates for traditional bank loans. For businesses looking to acquire equipment, vehicles or machinery, it has become the default route and rightly so.
The broker’s role has grown
As the lending market has become more complex, the value of independent advice has increased. NACFB broker members arranged £38 billion in lending in 2023, with 32% of SMEs successfully funded via brokers, up significantly year on year. With hundreds of lenders now active in the UK market, knowing where to go for a particular type of business or funding need has become a genuine skill, one that takes years to develop.
What hasn’t changed
For all the transformation in products, platforms and processes, the fundamentals of good business finance remain exactly what they were in 2006. Businesses that manage their finances proactively, maintain good records, plan and work with advisors who know the market continue to access better capital on better terms than those that don’t. The tools have changed. The principles haven’t.
Twenty years of navigating this market means we know where it’s been and we have a pretty good sense of where it’s going. If you’d like to talk through what the current lending landscape means for your business, give us a call on 01993 706403 or email enquiries@ngifinance.co.uk.
