According to iwoca's latest SME Expert Index, this figure has risen from 48% in Q3 2025 and is the highest level recorded since the company began tracking this question in Q4 2022.

When asked which policy changes will have the most negative impact on small businesses, a third (33%) of finance brokers pointed to the minimum wage increase.

Increases to the basic and higher rates of dividend tax were the second-highest concern (26%), followed by business rates reform (24%), underlining the breadth of cost pressures facing small businesses.

Finance brokers said lower taxes are needed to boost SME growth in 2026, with almost half (46%) citing this as their top priority.

The next most popular measures were stopping national minimum wage increases (14%) and enhancing local business support (14%).

Despite mounting cost pressures, SMEs are increasingly seeking finance to support their businesses. Three-quarters (74%) of finance brokers expect demand for SME finance to rise over the next six months, up from 66% last quarter.

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This was reflected by iwoca’s SME Lending Thermometer, which rose to 5.98 for Q4 2025, up from 5.15 in Q3. The score is based on a scale where 1 indicates extremely low demand for finance and 10 represents extremely high demand.

This growing appetite for finance comes as concerns about a potential recession have fallen to their lowest level in three quarters. Just 42% of brokers say their SME clients are worried about the possibility — down from 48% in Q3 2025. This suggests small business confidence is showing signs of recovery heading into 2026, bringing with it a willingness to invest and borrow.

Giovanni Contratti, broker channel director at iwoca (pictured above), commented: “Small businesses are clearly feeling the pressure of rising costs, and the further government-mandated cost increases in April will add to that burden. But what’s encouraging is that SMEs aren’t sitting back.

“Demand for finance is growing as businesses look to invest and continue growing.

“We’re seeing businesses take action rather than cautiously waiting and seeing, and at iwoca we’re backing them with the flexible finance they need to navigate these pressures.”