Demand for financing solutions to UK small and medium-sized enterprises (SMEs) is expected to cool, according to the latest survey by Iwoca.
The UK-based SME lender surveyed hundreds of finance brokers in the UK, who regularly submit applications for unsecured finance on behalf of SME clients, across April and May.
The survey found that 22 per cent of brokers expects demand for finance to fall, the highest figure recorded since tracking began in 2022. Meanwhile, 57 per cent of respondents still forecast demand to rise, but that is down from 74 per cent in the last quarter of 2025.
Read more: Iwoca partners with Teya to offer flexible loans to UK SMEs
This reduced appetite is due to recession fears among UK SMEs driven by energy and supply chain risks linked to the conflict in the Middle East.
“These numbers reflect what we are hearing from brokers – small businesses are worried, and the concerns are stacking up,” said Colin Goldstein, chief commercial officer, UK at Iwoca. “What SMEs can control is making sure they have the right financial backing to absorb shocks and keep moving. That is where we come in, and it is where we are focused.”
Read more: Challenger and specialist lenders overtake banks for SME finance
Almost three-quarters of brokers predict CPI inflation to remain above three per cent by the end of 2026, with 32 per cent expecting it to top 3.5 per cent — well above the Bank of England’s two per cent target.
The top concern of UK SMEs is current running costs, according to 54 per cent of brokers, while 12 per cent cite high interest rates, and seven per cent say lack of access to finance.
In addition, 70 per cent of brokers say rising energy prices form a clear risk to SMEs, and 78 per cent expect supply chain disruption to negatively impact small businesses’ performance.
Read more: Demand from SMEs for loans over £100k expected to ‘surge’ this year
