The share of gross lending by challenger and specialist banks has reached 60%, the highest level on record, a new report from the British Business Bank has revealed.

According to the findings, challenger and specialist banks are also continuing to outperform the UK’s bigger traditional banks.

The British Business Bank’s latest report, Small Business Finance Markets 2024/25, stated that of the £62.1bn of gross lending to smaller businesses in 2024, £37.3bn was provided by challenger and specialist banks.

Their share of gross lending (60%) exceeded that of the big five UK banks for the fourth year in a row, up from 59% in 2023, to reach the highest level achieved on record.

British Business Bank CEO, Louis Taylor, said: “Conditions are not easy for smaller businesses, with some domestic uncertainty meaning many were less willing to invest with confidence in 2024.

“If we are to achieve the growth we all want in the UK economy, it is important that we continue to make the case for business investment which can help drive economic growth, lift wages and improve living standards.

“The diversity of supply of finance, in terms of both product and provider, is an important factor in meeting the diverse needs of the UK’s highly varied smaller business community. The increasing role for challenger banks in 2024 is an encouraging sign, as is the continued rise of asset finance.”

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