Paragon SME lending rises 5.1% to £259.5m as digitalisation boosts growth

Paragon Bank’s SME Lending division increased new lending by 5.1% in the first half of its financial year, supported by growing demand for Government-backed funding and continued improvements from its digitalisation programme.

For the six months to 31 March 2026, new SME lending reached £259.5 million, compared with £247 million during the same period last year.

Growth was supported by a significant increase in lending through the Government’s Growth Guarantee Scheme (GGS), with Paragon providing £30.5 million of GGS-backed loans to SMEs during the period, representing a 66.7% increase year-on-year.

The bank also reported continued expansion in its asset-based lending portfolio, which increased by 6.8% compared with the year-end to £159.3 million.

Paragon said its ongoing digitalisation programme continued to enhance performance across the business, improving both offer and conversion rates. Around two-thirds of applications progressed to offer during the period, while the rollout of its new business portal to a wider network of introducers and partners helped streamline application processing.

As a result, 70% of applications for core business finance products were entered directly through the portal, up from 63% in the corresponding period last year, reducing manual handling and improving operational efficiency.

The division’s net loan book grew by 8.5% year-on-year to £925.8 million.

John Phillipou, Managing Director of SME Lending at Paragon Bank, said:

“We have continued to support SMEs with the funding they need to invest and grow, with good momentum in new lending during the first half driven in part by increased use of the Government Growth Guarantee Scheme.

“Alongside this, our digitalisation programme is continuing to improve the experience for brokers and customers, helping us process applications more efficiently and convert more opportunities into completed lending.”

Across the wider business, Paragon’s Commercial Lending division, which includes Development Finance, SME Lending, Structured Lending and Motor Finance, generated £645 million of new lending during the half-year, compared with £568 million in the prior-year period.

At Group level, Paragon Banking Group reported underlying profit before tax of £145.7 million and recorded a 3.8% increase in its overall net loan book during the first six months of the financial year.