Lending to mid-market businesses across the United Kingdom rose 14 percent in the first half of 2026, according to data released by the British Business Bank, signalling growing confidence among firms planning expansion and capital investment.
The increase, which represents approximately £4.7 billion in new lending facilities, was driven primarily by manufacturers and professional services firms seeking to upgrade equipment and enter new markets. The figures mark the strongest six-month period for mid-market lending since the first half of 2023.
“We are seeing a decisive shift from survival mode to growth mode,” said Catherine Ashworth, head of commercial lending at regional banking group Paragon. “Businesses that spent the last two years conserving cash are now actively seeking capital to fund expansion. The pipeline for the second half of the year looks even stronger.”
The data also reveals a notable change in how firms are using borrowed capital. Where refinancing dominated lending activity in 2024 and 2025, new lending for capital expenditure now accounts for 58 percent of mid-market facilities, up from 41 percent two years ago. Technology investment leads the spending categories, followed by property acquisition and workforce expansion.
Economists point to stabilising interest rates as a key factor. With the Bank of England holding rates steady through the first half of 2026, businesses have been able to model borrowing costs with greater certainty than at any point since early 2022.
“Predictability is everything in business planning,” noted Dr. Marcus Liu, senior economist at the Centre for Economics and Business Research. “When firms can forecast their debt service costs twelve to eighteen months out, they are far more willing to commit to long-term projects. That is exactly what we are now observing.”
The regional breakdown shows particularly strong demand in the West Midlands and the North West, where manufacturing firms have been investing in automation and green energy transitions. The services sector, concentrated in London and the South East, posted more modest growth but continues to account for the largest share of total lending by value.
Lenders surveyed for the report indicated they expect demand to remain robust through the end of 2026, though some cautioned that global trade uncertainties could temper the outlook for export-dependent manufacturers in the autumn.