Only 20.3% of brokers reported a decrease in applications, while nearly one third (31%) said volumes remained mostly unchanged.

Of those that saw a drop in applications, rising costs were cited as the main barrier to borrowing, followed by a continued sense of caution around rate movements.

With 43% of brokers citing no major change in the reasons for borrowing, refinancing and investment purchases remain the most common.

Allica’s survey revealed that 45% of brokers reported a rise in the number of businesses looking to purchase their own premises.

In bridging finance, brokers highlighted a strong appetite for growth, with 45% reporting a rise in investments, 44% in refurbishment, and 37% in development projects.

Allica said the survey reflected a dramatic turnaround from Q4 2024 when 51% of brokers were concerned about growth for 2025.

Charissa Chang, head of broker sales, North and midlands at Allica Bank, commented: “After a tough period, this is a sign that SME confidence is starting to return.

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“Businesses are making decisions again, and we’re seeing more clients looking to secure their premises and invest in their long-term future, which is exactly where the market needs to be heading.

“Allica’s recent SME Lending Gap report revealed that the UK has some of the lowest rates of business investment in the G7 — but SMEs are still planning, still borrowing, and still investing, and that says a lot about their mindset, and the role brokers play in helping them move forward.

“Overall, the findings suggest a more positive outlook than what might be expected, and while challenges remain, the direction of travel is encouraging.”

Brian Love, commercial finance director at Sedulo Funding, said: “We’ve definitely noticed a shift over the past few months as clients who were sitting tight are starting to re-engage, and while there’s still a level of caution, there’s also a stronger sense of wanting to plan ahead.

“What makes the difference now is working with lenders who can move at pace, but also take the time to understand each deal individually.”