Asset finance is expected to see the strongest demand for SME funding over the next 12 months, Asset Advantage has found.

The SME funding provider’s latest survey revealed that 72% of commercial brokers said asset finance will be driving business funding demand in the coming year, while 25% also anticipate interest and demand for business acquisition and expansion loans.

Furthermore, nearly 60% of commercial brokers said they have seen an increase in client demand for funding to buy a business or complete a management buy-out.

Areas such as invoice finance (22%) and property-related commercial finance (17%) are expected to be less popular.

Despite ongoing market and economic pressures, Asset Advantage said the news reflects rising demand among UK SMEs for growth-based lending, prioritising investment in new equipment and expansion.

The findings follow recent data from the Finance and Leasing Association, which revealed that total asset new business increased by 11% year-on-year in September.

Meanwhile, the Office for National Statistics reported that the value of domestic mergers and acquisitions in Q3 2025 totalled £5.3bn, which is a nearly £2bn increase quarter-on-quarter.

Sales director at Asset Advantage, Gary Thompson, said: "Commercial brokers are telling us that there is 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 in the coming year. 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.

"While the findings are certainly encouraging, delivering on this demand relies on flexible, growth-focused funders – those who are willing to understand the business behind the case and ready to support their investment and expansion plans. 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. As we head into 2026, this remains our priority as we help brokers and their SME clients realise these growth ambitions."

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