The Finance & Leasing Association has called on the Government to use the Budget to unlock more institutional and private capital for specialist SME finance.
Its Budget submission proposes a new Productive Finance Partnership, led by the British Business Bank, designed to connect long-term sources of capital with lenders financing machinery, vehicles and technology for SMEs.
The FLA says its members already finance 34.3% of UK investment in machinery, equipment and vehicles and argues that mobilising more private capital could help increase business investment and productivity.
FLA members provided £163bn of new finance to UK households and businesses during 2025, including £40.3bn of asset finance, of which £24.4bn supported SMEs.
PRIVATE CAPITAL ALREADY PLAYING GROWING ROLE
The proposal comes as the British Business Bank increases its efforts to bring private capital into SME lending.
During 2025/26, the Bank supported £9.4bn of finance for smaller businesses, including £4.3bn of private capital crowded in alongside its activities.
Its ENABLE Funding programme, which helps smaller finance providers access institutional funding, had facilitated more than £3bn of finance to almost 100,000 businesses by the end of March.
The Bank has also been developing new structures to bring institutional investors into specialist lending, including asset finance. Earlier this year it participated in its first public asset-backed securitisation alongside a new £75m ENABLE Funding facility for Propel Finance.
‘MORE PRIVATE CAPITAL’
Shanika Amarasekara MBE (main picture), chief executive of the Finance & Leasing Association, says: “The government has made increasing investment and productivity central to its growth agenda. The Budget is an opportunity to turn that ambition into investment in businesses and communities across the country.
“FLA members already finance more than a third of UK investment in machinery, equipment and vehicles. They provide the finance that allows businesses to invest in the assets and technology they need to modernise, increase capacity and become more productive.
“With public finances constrained, the question is how we get more private capital flowing into that productive investment. Our proposed Productive Finance Partnership would bring together the British Business Bank, institutional investors and specialist lenders to help make that happen.”
SME ACCESS TO FINANCE
The FLA is also proposing an industry-funded “Ready for Finance” service to help SMEs understand their funding requirements and improve their ability to access appropriate finance.
The proposal comes as the British Business Bank’s latest research shows challenger banks now account for 60% of gross SME bank lending, compared with 39% in 2012, reflecting the growing role of specialist providers in the market.
The FLA also wants the Budget to use private finance to support household energy improvements and an affordable transition to electric vehicles.
Amarasekara adds: “The Budget should therefore focus on a simple objective: creating the conditions for finance to flow into the businesses, assets and technologies that will raise living standards and productivity.
“If we can mobilise more private capital, widen access to finance and give lenders the certainty to invest, the finance industry can help turn the Government’s growth ambitions into economic activity in every part of the country.”
