Bank lending to small businesses across Great Britain has fallen by £26.8bn in three years, according to analysis published by money.co.uk on 15 September. That is a 30% drop in the stock of loans and overdrafts. Nine in ten postcode sectors now have less bank credit than they had in 2022.
01What the analysis found
money.co.uk worked through UK Finance's postcode lending dataset, published on 30 June 2026. It counts loans and overdrafts outstanding to small and medium-sized businesses in every postcode sector in Great Britain.
According to the analysis, the total fell from £89.5bn in the second half of 2022 to £62.6bn at the end of 2025. It fell by a further £6.5bn, or 9.5%, during 2025 alone.
The fall is close to universal. More than 8,500 postcode sectors have active data. Nine in ten of them saw lending decline between 2022 and 2025, by an average of 36%. In 78% of sectors, lending shrank in the last year.
The gap between regions is wide. According to money.co.uk, businesses in the North East have an average of £4.9m of bank lending per postcode sector. In London the figure is £12.5m. In one in eight sectors, lending is so low that UK Finance suppresses the figure to protect confidentiality. Scotland has the highest share of these areas.
02Why does it matter to a small business?
Because the local bank is a smaller part of the market than it was. According to the British Business Bank, quoted in the same analysis, challenger and specialist banks now provide 60% of new SME bank lending. In 2012 it was 39%.
The figures measure credit outstanding rather than new loans. Part of the fall is pandemic-era borrowing being repaid. But the total is now 14.5% below its level at the end of 2019. The shrinkage goes beyond that.
For a business owner, the practical reading is simple. A no from the bank is now more likely to reflect a lending policy than a verdict on the business. The lenders competing for new customers sit largely outside the high street.
Our new guide sets out where the money is now. It covers a Start Up Loan for businesses trading under five years, asset finance, invoice finance and the Growth Guarantee Scheme. If you plan to borrow this autumn, it is worth understanding your growth finance options before you approach a lender.
