Allica Bank calls for structural change in how SMEs are funded in the UK

Allica Bank wants the UK to move from a system where SMEs avoid borrowing and grow slowly, to one where productive risk is supported, working capital is accessible, and banks actively help established businesses invest and scale.

A new survey of nearly 200 accountants conducted by business banking provider Allica Bank shows that 83 percent believe their SME clients will achieve some level of growth next year, with 13 percent expecting high growth. Only 6 percent anticipate no growth at all, suggesting that established UK businesses remain resilient despite higher interest rates and economic uncertainty.

That confidence is reflected in clear investment plans. Accountants say their clients are prioritising spending on new machinery and equipment, working capital and cashflow support, and digital transformation. However, the survey also highlights a growing frustration that banks are not keeping pace with business ambition.

Just 3 percent of accountants believe their clients receive adequate support from their bank. Nearly half say their clients receive some support but not enough, while 40 percent say their clients do not get the funding they need at all. More than half of accountants are not confident their clients can access the borrowing they need from their existing bank.

This mismatch mirrors the findings of Allica Bank’s Rebooting SME Finance to Unlock Growth report, which argues that high-street banks have steadily pulled back from productive SME lending over the past two decades. The report estimates a £65 billion gap in SME credit compared with historical trends, largely driven by banks shifting towards low-risk, property-backed lending rather than funding growth and working capital. The decline in overdrafts has been particularly stark, with overdrafts now accounting for just 5 percent of SME bank finance, compared with more than 30 percent in the late 1990s.

The report also links this retreat in lending to the UK’s weak investment record. Britain now has the lowest business investment rate in the G7, with SMEs investing far less than larger firms. As a result, many businesses are choosing to grow more slowly rather than take on debt, not because they lack ambition, but because access to finance has become too restrictive.

Accountants say relationship-led banking remains critical. More than three-quarters cite access to a dedicated relationship manager as the most important factor when recommending a bank, followed by competitive rates and strong digital tools. This sentiment was echoed in a separate survey of established businesses, where 62 percent said banks do not understand the needs of smaller firms.

Based on the survey and Allica Bank’s Rebooting SME Finance to Unlock Growth report, Allica is very clear about what it wants to happen next.

1. Close the SME lending gap left by high-street banks
2. Expand government-backed SME lending guarantees
3. Restore working capital finance, especially overdrafts
4. Refocus regulation on SME growth, not just bank safety
5. Strengthen relationship-led banking via accountants

Sophie Hossack, Head of Partnerships at Allica Bank, said:

“It’s encouraging that our accountant partners believe that growth in 2026 is achievable for them and their clients’ businesses.

“But the data shows there’s clearly a mismatch between the ambition of business owners to invest and grow, and what traditional banks are doing to support them. Plugging this gap is going to be critical to support UK economic growth next year, and banks need to do more.

“A common theme we see at Allica is that accountants are the first port of call for SMEs. They provide clients with strategic and business support, including guidance on how to access finance. But they can’t do it on their own, which is why we have a dedicated accountancy partnerships team to provide firms with support when it’s needed.”