Allica Bank report shows £5.8bn impact of challenger lending to Britain’s SMEs
A new report from Oxford Economics, commissioned by Allica Bank, highlights the powerful role challenger banks play in driving Britain’s economic growth.
The report finds that in 2024, Allica Bank’s lending to Britain’s established SMEs supported over 84,000 jobs across the country, contributing £5.8bn to the economy and delivering £1.4bn in tax revenues.
The research reveals how a new generation of lenders like Allica are powering growth and productivity across Britain’s established SMEs. Sometimes known as the ‘real economy’, these SMEs typically employ between 5 and 250 people and account for over a third of the UK employment and turnover.
Allica’s £5.8bn contribution to UK GDP
Allica has grown rapidly since opening its doors five years ago, cementing itself as the market leader for established SME lending.
From its first loan in March 2020 to originating more than £1.5bn of loans to SMEs last year, Allica has in aggregate lent more than £3bn as of the end of 2024 – with it now surpassing £3.5bn so far this year.
The report demonstrates the significant impact productive finance has on the UK economy. Key highlights include:
- Supporting over 84,000 jobs – one in every 440 jobs
- £5.8bn total contribution to UK GDP (£2.2bn direct; £1.8bn indirect; £1.8bn induced)
- Generated £1.4bn in tax revenues
Allica’s impact is being felt right across the country. From Wales and Scotland to the East Midlands, Allica is helping fuel local growth and prosperity. Allica’s lending supported nearly 10,000 jobs in the North West, 8,900 in the West Midlands and 7,700 in the East Midlands. As a share of regional employment, Allica’s impact was largest in Wales and the North East.
Behind the success is Allica’s unique combination of proprietary technology and its relationship manager team – a network of experts who truly understand the needs of Britain’s SMEs and is set to double in size this year.
Richard Davies, CEO of Allica Bank, said: “Established SMEs are the engine of Britain. Yet for too long they’ve been underserved by the incumbent banks and I’m delighted to see this change as challengers like Allica support them in ways which really make a difference.
“Every £1m in lending issued by Allica enables our established SME customers to contribute £2.4m to UK GDP, provide 35 jobs and £600,000 in tax revenue. That’s a direct impact – creating jobs, unlocking investment and helping power growth across all corners of the country.”
Challengers leading the charge
The SME financing landscape has undergone a significant shift in recent years, but small businesses remain underserved by big banks and face both a savings squeeze and lending gap.
Allica research revealed that millions of SME deposits are sitting in accounts that offer zero interest, while big banks systematically offer larger companies better savings interest rates than they offer small businesses, totalling £9bn a year missing in lost savings interest holding back SMEs.
Meanwhile Allica also revealed in April this year the £65bn lending shortfall, in which long term trends showed a collapse in lending to UK SMEs, drastically limiting their ability to scale.
But as the legacy banks have stepped back, challengers like Allica have stepped up – with the British Business Bank highlighting that over 60% of all SME lending is now coming from challenger and specialist banks. This is the highest on record, driven by digital innovation, speed of decision-making and a focus on relationship-based lending.
Real world impact – supporting British business
From independent nurseries to manufacturing exporters, Allica’s impact has been felt across the UK – showcasing the breadth of the Britain’s established SMEs:
- Kinder City Nursery, Luton: When founder Ovais Ahmed had the opportunity to buy the church building that housed his nursery, Allica approved the mortgage within four days. The purchase secured the nursery’s long-term future and gave it the “autonomy to be more creative and invest in the experience of children and their parents alike.”
- KCM Waste Management, Rotherham: After being turned away by a high-street bank, the 120 employee, family-owned recycling business secured a flexible growth facility from Allica. “They were genuinely enthusiastic about helping us grow”, commented Gareth Hickling, its MD.
- The Devil’s Stone Inn, Devon: Owner Suzy Cremer refinanced an expensive bridging loan with an Allica commercial mortgage, saving £1,000 a month and reinvesting those savings into upgrading the pub and its accommodation. “It’s so refreshing to have bank that actually takes an interest in the business”, she said.
- Rainbow Productions, London: A King’s Award-winning manufacturer which supplies the Olympics and Legoland, the firm used Allica’s funding to expand operations. “Having Allica on board will help us now and drive growth for the future”, said managing director Simon Foulkes.
The research comes on the back of a successful year for Allica which also recently announced its third acquisition, acquiring UK embedded finance startup Kriya. The acquisition accelerates Allica’s drive to penetrate 10% of the established SME finance market by the end of 2028, building on momentum and targeting advancing an initial £1bn of working capital finance to SMEs.