{"id":28445,"date":"2025-05-22T10:00:45","date_gmt":"2025-05-22T09:00:45","guid":{"rendered":"https:\/\/davies-group.com\/consulting\/?post_type=blog&p=28445"},"modified":"2026-01-20T14:58:03","modified_gmt":"2026-01-20T14:58:03","slug":"commercial-finance-rethinking-our-perspective","status":"publish","type":"blog","link":"https:\/\/davies-group.com\/consulting\/blog\/commercial-finance-rethinking-our-perspective\/","title":{"rendered":"Commercial Finance: Rethinking our perspective"},"content":{"rendered":"

I attended the UK Finance: Commercial Finance Conference<\/a> earlier this week and wanted to share a few reflections. According to the Federation of Small Businesses (FSB), SMEs make up 99.9% of all UK businesses and account for around 61% of private sector employment. They are, by every measure, the backbone of the UK economy.<\/p>\n

Since the pandemic, this segment has faced persistent pressure: trade tensions, political uncertainty, supply chain fragility, economic fragmentation, rising input costs, and tighter margins.<\/p>\n

Ben Chu\u2019s keynote, Exile Economics, framed the macro direction clearly. The era of unfathomably interconnected economies is being unwound \u2014 replaced by a move toward national self-sufficiency and economic isolationism. For the UK, a trade-driven and globally exposed market, this is a structural headwind.<\/p>\n

And it makes the case for a stronger, better-capitalised SME base even more critical.<\/p>\n

1. Rethinking the role of debt<\/b><\/h2>\n

Debt remains misunderstood. Too often, it\u2019s treated as a short-term fix rather than a strategic enabler. That mindset needs to change. If we want businesses to scale, they need capital that supports growth \u2014 not just working capital.<\/p>\n

The way we categorise SMEs doesn\u2019t help either. A sole trader and a scale-up do not have the same capital needs. Treating them as a single segment leads to poor targeting, blunt instruments, and limited impact.<\/p>\n

2. Lending models need to reflect the economy we actually have<\/b><\/h2>\n

The UK is a services-led economy. Most SMEs are asset-light. Traditional collateral-backed lending is increasingly misaligned with the nature of the businesses we\u2019re trying to support.<\/p>\n

More access to flexible, cashflow- and performance-based approaches are needed \u2014 especially for high-growth firms without physical assets. This is where blended finance models have a role to play.<\/p>\n

3. Private markets are accelerating \u2014 and shifting the dynamic<\/b><\/h2>\n

While traditional bank lending remains vital to the SME ecosystem, private markets are expanding at a much faster pace \u2014 projected to reach $14.8tn globally by 2028, compared to \u00a3487bn in UK bank lending (UK Finance, UK Public and Private Capital Markets \u2013 A Unified Strategy for Growth and Prosperity, March 2025).<\/p>\n

Banks, constrained by regulation and capital requirements, often struggle to remain agile and commercially relevant across the full spectrum of SME need. But that doesn\u2019t mean they\u2019re out of the picture.<\/p>\n

We\u2019re now seeing encouraging partnerships forming between banks and private market firms \u2014 combining balance sheet strength with specialist capital and faster execution. This kind of hybrid model may well define the next chapter of SME funding.<\/p>\n

4. Infrastructure will dictate pace<\/b><\/h2>\n

Markets like the Nordics and Singapore are setting the benchmark for digital financial infrastructure.<\/p>\n

The Nordics have long leveraged national digital ID systems and open banking frameworks to streamline SME onboarding and improve credit access. Singapore, meanwhile, is investing heavily in tokenisation, open finance, and government-backed digital platforms designed specifically to enable SME growth.<\/p>\n

These aren\u2019t speculative innovations \u2014 they\u2019re operating models. And they\u2019re moving capital faster, with less friction, and greater precision.<\/p>\n

If the UK wants to compete on productivity and scale, this is where investment needs to shift.<\/p>\n

The challenge is no longer intent \u2014 it\u2019s execution.<\/b><\/h2>\n

SMEs don\u2019t need generic products. They need more personalised services supported by solutions tailored to where they are and where they\u2019re going. That means funding the right businesses, with the right capital, at the right time \u2014 and moving at their speed.<\/p>\n

Get that right, and we won\u2019t just unlock growth \u2014 we\u2019ll reshape the UK\u2019s competitive edge in the decade ahead.<\/p>\n","protected":false},"excerpt":{"rendered":"

Reflections from the UK Finance: Commercial Finance Conference on how the UK can better fund SMEs \u2014 with smarter debt, modern lending models, and digital infrastructure.<\/p>\n","protected":false},"featured_media":28446,"parent":0,"menu_order":0,"template":"","format":"standard","meta":{"_acf_changed":false},"practices":[29],"industries":[105],"capabilities":[104],"class_list":["post-28445","blog","type-blog","status-publish","format-standard","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"\nCommercial Finance: Rethinking our perspective - Davies<\/title>\n<meta name=\"description\" content=\"Commercial Finance is evolving \u2014 insights from the UK Finance Conference on SME funding, smarter lending, and digital infrastructure.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/davies-group.com\/consulting\/blog\/commercial-finance-rethinking-our-perspective\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Commercial Finance: Rethinking our perspective - 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