The latest SME Pulse survey from Atom bank for first quarter 2025 has revealed that more than half of respondents (53%) said they were seeing an increased appetite for borrowing among their clients, though this was down from the last edition of the survey (56%) in Q4 2024.

There was also a drop in the proportion of advisers reporting a reduced borrowing appetite, which fell to around 3% of respondents.

Instead, the proportion of advisers reporting unchanged demand from SMEs increased by 5%, reaching almost half (44%).

Of those experiencing increased appetite from business clients, lower interest rates were cited as the key driving force. More than half (57%) of respondents said the reduced cost of borrowing was the prime reason commercial finance had grown, significantly ahead of other major factors like greater keenness from lenders (32%) and business confidence (30%).

While property purchase remains the most common reason for borrowing, the proportion of brokers highlighting this factor fell by 6% to 51%. In contrast, refinancing existing debt rose by 6% to 24%, while growth and business expansion increased by 5% to 23%.

Brokers were also asked about their take on specific commercial sectors.

Brokers supporting clients in the modern industrial sector were questioned on the effects of spiralling energy costs and supply chain disruptions. Two fifths (40%)said they had seen these factors impact their clients, while fewer than one in three (31%) said they had seen no such impact.

In another sector, food and hospitality, more than two-fifths of brokers (43%) saw unchanged or increasing demand for borrowing from clients. Restaurants and cafes were the most sizeable cohort, with just under a third (29%) of advisers reporting a rise in demand, ahead of 20% for pubs and bars, and 13% for food manufacturing.

The survey suggested that access to commercial funding had become easier. Fewer than one in four brokers said they were currently finding it difficult to access funding for their clients, a marked improvement on 2024 when one in three brokers were experiencing challenges.

Commenting on the latest figures Atom Bank head of business lending Tom Renwick said: “It’s enormously encouraging that so few brokers in our latest SME Pulse are reporting a drop in demand from their business clients, despite the various economic headwinds they have faced at the start of 2025.

“This shows the level of confidence among British businesses at the moment, and suggests they believe this is the right time to raise the funds needed to support their growth plans.”

He added: “It will be interesting to track whether the introduction of trade tariffs by the US, and the subsequent market turmoil, has any impact on their plans in future editions of the Pulse survey.”