Brokers say SME confidence improving but access to funding issues remain

When asked what they thought would have the biggest impact on SME demand over the coming 12 months, brokers cited interest rate movements (28%), ahead of economic growth and customer demand (21%), inflation and business costs (19%) and government policy (17%).

The latest edition of Atom Bank's SME Pulse revealed demand among business borrowers is growing once more. More than a third (38%) of brokers reported increasing demand among their SME clients, up from 33% in the last edition for Q1. Meanwhile, the proportion reporting a decline in demand dropped from 12% to just 4%.

Behind that recovery is improved business confidence, which was identified as the key driver by more than two thirds of respondents (67%), ahead of more product options (44%) and lender appetite (28%).

However, funding accessibility has become more challenging. One in four brokers (25%) said they were currently finding it difficult to secure funding for their clients, up from 19% in the previous study and more than double the 11% who reported accessibility issues in the Q4 2025 study, which had represented a record low.

Rising interest rates, stricter lender criteria and a preference among lenders for high-value corporate clients were all identified as contributing factors.

In addition, one in four brokers are concerned their business clients will be less willing to borrow under the new Prime Minister.

A quarter (25%) of broker respondents are expecting businesses to be somewhat less inclined to look to external funding, compared with 17% of brokers who suggested there may be an increase in demand. The majority (57%) predicted the change of occupant in 10 Downing Street would have no impact at all on lending appetite, while an even larger majority of brokers (79%) said they had seen no change since Andy Burnham became Prime Minister.

Chris Storey, chief commercial officer at Atom Bank, commented: “We are still in the early days of the Andy Burnham government, so it’s perhaps unsurprising that there has been little immediate impact on SME demand. However, it’s notable that brokers are cautious about the months ahead, and what the change in Prime Minister means for borrower appetite. All eyes will be on next month’s Budget, and what impact it may have on the nation’s small businesses.

“While accessibility is good on the whole, it is somewhat of a concern that the proportion of brokers reporting problems in securing funds for their clients has increased for two straight editions of our study."