Business loans are winning SME customers. How should the industry respond?

Short-term business loans are growing faster than any other product in the FLA’s figures — up 20% in the first half of 2026, against 8% for hire purchase and leasing. Receivables and asset finance lenders believe they are losing volume to them, and brokers report the balance of business shifting away from receivables and asset finance towards loans.

Why are some customers and brokers leaning towards such loans? Our survey of asset finance leaders, run ahead of Finance Connect’s November conference, indicates that for some types of asset purchase customers are choosing loans over asset finance and short term loans in particular, mainly for speed and simplicity. Speed of decision ranks first among the reasons lenders see brokers and customers pick loans; total cost ranks last.

Choosing a product that delivers money faster is a market working. The problem is what happens when fast delivery comes with limited checks. A short term loan carries no real purpose test and no verification of what the money buys, so subject to credit a business under cashflow pressure can borrow repeatedly, from lenders who cannot see each other’s commitments. This week the FLA called for industry action on exactly this — loan stacking — after members reported businesses layering borrowing that they may not be able to sustain.

Customers want speed, and good outcomes require checks. Our hypothesis is that the industry can deliver both, and that doing so is the growth opportunity. We will test that hypothesis at Where’s the Growth? – Finance Connect’s Autumn Conference on 24 November, in three parts.

The first is speed. A few practitioners in our asset finance community tell us they have automated a traditional hire purchase proposition from proposal to payout in under eight minutes, verification included. Eight minutes is far from the norm, and some of the gap is there for good reason: asset finance requires the asset to be identified and valued, because those checks prevent fraud. The opportunity is not to wish that work away but to strip out the friction that serves no purpose — and firms in our community are now using AI to find and remove exactly those bottlenecks. Yet our survey finds that while three-quarters of lenders describe their systems as ready, almost nobody has automated verification, and many still pay out manually. The questions for the conference: which checks are necessary and which are habit — and how much of the loans advantage survives once the habit is gone?

The second is the customer’s choice. Half of the lenders in our survey say SME customers mostly do not understand the price difference between loans and asset finance — and loans can typically cost substantially more. The “unsecured” label misleads too: every loan provider in our survey takes personal guarantees — the loan is secured on the owner. Asset finance puts the security primarily on the asset instead, and it is tied to a purpose, which makes it resistant to the overborrowing the FLA describes. We think that for the purchases where it fits, asset finance is often the better product, and that leads us to ask whether the industry is properly selling that case where the choice is made — through brokers, who initiate the product decision in most cases, and on digital platforms where SMEs increasingly access finance. The questions: whose job is it to explain the choice, and what would selling asset finance’s value through those channels take?

The third is visibility. We think loan stacking persists because lenders cannot see a customer’s existing commitments, and that data sharing across lenders and brokers would fix it — the FLA’s call for collaboration is spot on. The questions: what would that data sharing look like in practice, who builds and pays for it, and would lenders act on what it showed when the competitive pressure is to fund fast?

We think a fast journey and an informed choice are compatible. The conference is where that claim gets tested.

Where’s the Growth? – Finance Connect’s Autumn Conference, takes place on 24 November in Kings Place, London. Full survey findings will be published to participants ahead of the event.

View the full Finance Connect UK Autumn Conference 2026 agenda here.

Register here: https://afcconferenceuk.com/financeconnectautumnconference2026/en/page/book-now

The Finance Connect UK Autumn Conference 2026 is supported by Odessa as Event Partner, with Alfa as Headline Sponsor of the Asset Finance community stream and Dancerace as Headline Sponsor of the Receivables Finance Connect Conference.