Why lenders must adapt to changing attitudes to ownership

A younger generation of entrepreneurs with a different attitude to ownership is now in pole position to drive forward the economy – lenders must move with them

A soon-to-be retiring generation of British entrepreneurs generally had a similar view when it came to business – if they wanted to grow, they bought the asset. As with many areas of society, ownership was deemed more secure and a signal of strength and permanence.

But emerging evidence makes clear that is no longer the dominant mindset.

We are now witnessing a generational handover in British business, and with this younger peer group stepping into leadership roles comes a very different attitude to assets, finance and risk.

Younger business leaders have grown up in a subscription economy. Mobile phone contracts, Netflix, cloud software and on‑demand services have shaped how they think about value. In an increasingly fast-moving and complex regulatory and operating environment, access, flexibility and cash flow matter more than outright ownership, and that shift is now visible in SME lending data.

According to the Finance & Leasing Association (FLA), which I Chair, UK asset finance lending to SMEs surpassed £24 billion in 2025, an all-time high which also marked the fifth consecutive year of growth. What’s more, asset finance has rebounded faster than many other forms of lending post-pandemic, revealing a general behaviour among businesses to keep investing even during turbulence. Leasing and hire purchase finance now funds around a third of UK investment in machinery, equipment and software, underlining just how mainstream these models have become.

The generational dimension is particularly striking. Recent UK research shows that entrepreneurs aged 18–34 are 32% more likely to use subscription-based business models than those aged over 55. Among younger SME owners, 94% say subscriptions improve cash flow, compared with 70% of baby boomers. I would put this shift down to familiarity and confidence. For newer entrepreneurs, paying for usage rather than ownership feels intuitive – it’s a concept they’ve always known.

The pandemic fast tracked this behavioural shift. Faced with uncertainty, volatile demand and rising costs, SMEs prioritised flexibility. The proportion of smaller businesses using external finance rose sharply post‑COVID, while challenger and specialist banks now account for nearly 60% of SME gross lending. Traditional, one‑size‑fits‑all lending is giving way to more tailored, partnership‑driven approaches.

At Paragon SME Lending, we see this evolution firsthand. Increasingly, our customers value strategic partnerships and counsel, seeking finance that aligns with how their unique businesses actually operate. That means structures that flex with utilisation, technology and sustainability goals.

A good example is our work with Zeti, where we support usage‑based lending for commercial vehicle fleets. Instead of financing an asset based on general assumptions, finance is linked to real‑world usage data. For operators, this creates a fairer, more transparent model that better reflects cash generation and risk, while enabling investment in cleaner, more efficient fleets.

Elsewhere, through models such as our power purchase agreements (PPAs) with HDM Energies, we are helping SMEs access renewable energy infrastructure without the need for heavy upfront capital investment. Businesses benefit from predictable energy costs and lower carbon footprints, while retaining cashflow flexibility. Think of it as a subscription‑style approach applied to physical infrastructure. What’s more, demand for it is growing fast.

These models illustrate a broader point: as businesses seek to meet growing sustainability requirements and close inefficiency loopholes, there’s a growing need to invest in new technology, equipment and energy systems. Expecting them to fund that solely through ownership is increasingly unrealistic. In an uncertain world, this makes flexible finance, long‑term partnerships and outcome‑based structures all the more essential.

Change may be daunting, but I really believe specialist lenders have a unique opportunity here – particularly compared to those on the high street. If we move fast and continue to evolve and innovate to ensure finance is customer‑aligned, we’re best placed to support a new generation of entrepreneurs to invest, grow confidently and contribute to long‑term UK economic growth. As attitudes to ownership evolve, it’s on lenders to ensure we deliver access.