Survey points to rising demand for asset finance and acquisition funding

Asset finance is expected to lead demand for SME funding over the next year, according to a survey of commercial finance brokers carried out by Asset Advantage.

Seventy-two per cent of respondents said asset finance would be the main driver of business funding requirements in the coming 12 months. One in four brokers also forecast increased interest in loans for business acquisitions and expansion.

Invoice finance (22%) and property-related commercial finance (17%) were seen as less likely to dominate demand.

The results reflect growing appetite among SMEs for investment in equipment and expansion, alongside rising interest in acquisitions. Recent figures from the Finance and Leasing Association showed new asset finance business in September was 11% higher than the same month last year, while Office for National Statistics data recorded domestic merger and acquisition activity of £5.3bn in the third quarter of 2025, almost £2bn higher than the previous quarter.

Nearly 60% of brokers surveyed said they had seen increased client demand for funding to buy a business or support a management buy-out.

Gary Thompson, sales director at Asset Advantage, said brokers were reporting “growing momentum” among SMEs.

“Rather than seeking short-term fixes with inappropriate cash-flow loans, they are actively pursuing funding that helps them grow – and asset finance is top of their list,” he said. “Alongside this, SMEs are looking to grow through expansion and are therefore prioritising funding for business acquisitions. This certainly mirrors our current business levels and expectations for the year ahead.”

He added that meeting this demand would require funders to take a flexible and pragmatic approach to lending as SMEs pursue investment and expansion. “Rather than rigid processes and restrictive appetites, we need an open-minded and pragmatic approach to lending to really give brokers the tools and support they need,” he added.