The IMF’s latest forecast puts UK GDP growth at 1.0% for 2026. That’s an upgrade from the 0.8% it predicted in April, but it’s still well below the 1.3% that was on the table at the start of the year. For mid-market firms with expansion plans, hiring commitments or capital investment on the horizon, that number matters. It shapes lender appetite, credit committee confidence and ultimately how much funding is available and on what terms.
The headline figure doesn’t tell the full story, though. Business investment fell 2.5% in Q4 2025, and although it recovered modestly in Q1 2026, it remains 1.3% below where it was a year earlier. GDP grew by 0.6% in Q1 2026, which means the broader economy is ticking along even as companies hold back on capital spending. For firms sitting in the £5m to £100m turnover bracket, the gap between wanting to grow and being able to finance that growth is getting harder to close through traditional routes alone.
The “Missing Middle” in Business Lending
There’s a long-standing problem in UK business finance that doesn’t get enough attention. Mid-market firms often fall between two stools. They’re too big for standard SME lending products but too small to access the institutional-grade facilities that banks reserve for large corporates. Shawbrook’s 2026 research put a number on it: 63% of mid-sized businesses said they don’t align with traditional lending criteria.
That’s a big proportion of companies that are, by most measures, in a strong position to grow. They have trading history, assets, revenue and a clear use for the capital. But the products available to them don’t always fit.
High street banks have tightened their risk appetite over the past two years. The base rate has been held at 3.75% since December 2025, and while that’s down from the 5.25% peak, borrowing costs are still considerably higher than they were pre-2022. Credit committees are being cautious, and the firms that feel that caution most are the ones in the middle: profitable, growing, but without the balance sheet scale that makes banks compete for their business.
Where Alternative Lenders Have Stepped In
What has changed is the range of options outside traditional banking. Challenger and specialist banks now account for 60% of gross SME lending in the UK, up from 39% in 2012. Private credit funds have grown rapidly too, with global assets under management expected to pass $2 trillion this year. Across the private credit market, around 70% of transactions are tied to M&A activity, with private credit particularly dominant in mid-market deals. The remaining 30% covers growth capital, refinancing and working capital facilities that mid-sized firms can tap into.
These lenders tend to operate differently. They’ll look at cash flow forecasts, sector-specific metrics and management quality rather than relying purely on asset-backed security and rigid affordability models. For a services business or a tech firm without substantial property on the books, that’s a meaningful difference.
The trade-off is that the market is now genuinely crowded. With 28 new providers entering smaller business banking since 2013 and dozens more operating in the private debt and asset finance space, the sheer number of options can make it difficult for a finance director to know where to start.
Jonathan Moffatt, Head of Business Finance at Clifton Private Finance, tells us: “The lending market has more depth than it’s had in years, but depth doesn’t always mean clarity. A mid-market firm with a £2m funding requirement might have 15 or 20 lenders who could technically take the deal, but each one will look at it differently. The skill is in knowing which three or four are genuinely the best fit for that specific business, that specific purpose and that specific timeline.”
Why Broker Expertise Matters More in a Tight Economy
When the economy is growing at 2% or above, credit flows more freely and businesses have more margin for error. At sub-1% growth, the tolerance for a poorly structured deal is much lower. A lender that might have stretched on terms during a boom period will be more rigid now, and a business that picks the wrong product or the wrong lender could find itself locked into terms that restrict its ability to act when opportunities come up.
This is where a broker adds the most value. A good commercial finance broker doesn’t just find a lender. They structure the deal before it goes to market, matching the funding requirement to the lender whose credit appetite and sector expertise align with what the business actually needs. For a large business loan in the UK, that process often involves layering different products together: a term loan for the core requirement, an invoice finance facility to support working capital, or asset finance running alongside a commercial mortgage.
The numbers back this up. Around 69% of UK small business lending is now arranged through brokers, and that proportion is growing. The reason is simple: lenders themselves prefer to receive applications that have been pre-qualified and properly packaged, because it reduces their processing cost and increases the likelihood of completion.
What Mid-Market Firms Should Expect from Their Broker
Not all brokers operate the same way, and mid-market firms should be selective. A broker handling a six- or seven-figure facility needs to do more than run a comparison. They should be able to explain how different lenders will assess the deal, what the likely sticking points will be in underwriting, and how to present the application so that it lands well with the credit committee.
For firms considering an acquisition, the broker’s role becomes even more critical. Private credit lenders are competing hard for quality deals in 2026, offering tighter spreads and more flexible covenant packages. But accessing those terms requires a broker who knows which funds are actively deploying, what their minimum ticket sizes are and how quickly they can move. Speed matters in M&A. A deal that takes 12 weeks to fund when a competitor can close in six will often lose.
Jonathan Moffatt adds: “We’re seeing more mid-market clients come to us after they’ve already had a conversation with their bank and been told ‘no’ or offered terms that don’t work. The frustration is understandable, but it often means the business has lost weeks or months before exploring the wider market. The firms that get the best outcomes are the ones that involve a broker early, before the requirement becomes urgent. In a sub-1% economy, that gives us time to structure the deal properly, approach the right lenders in parallel and create competitive tension that benefits the client.”
Slower Growth Doesn’t Have to Mean Slower Ambition
The UK economy isn’t going to hand mid-market firms easy growth in 2026. GDP forecasts hover around 1%, inflation is still above target at 2.6%, and the base rate isn’t moving any time soon. But the lending market has evolved significantly, and the firms that take advantage of that evolution will be the ones that keep moving forward.
The key is access. Not just to capital, but to the right capital, structured in the right way, from a lender that genuinely understands the business. That’s the gap a good broker fills, and in a tight economy, it’s a gap that matters more than ever.
