A new report from Oxford Economics, commissioned by Allica Bank, reveals that the challenger bank’s lending to Britain’s established small and medium-sized enterprises (SMEs) contributed £5.8billion to the UK economy in 2024.
The research highlights the critical role challenger banks are playing in driving economic growth. Allica Bank’s lending activities supported over 84,000 jobs across the country in 2024—equivalent to one in every 440 jobs in the UK—and generated £1.4billion in tax revenues.
The report quantifies the impact of productive finance, calculating that every £1million in loans issued by Allica enables its SME customers to contribute £2.4million to UK GDP, support 35 jobs, and generate £600,000 in tax revenue.
Challenger banks fill the void left by legacy lenders
The findings underscore a significant shift in the SME financing landscape. While traditional high-street banks have pulled back from the sector, challenger and specialist banks have stepped up. Data from the British Business Bank indicates that over 60 per cent of all SME lending now comes from these newer institutions, a record high driven by their digital innovation and relationship-focused approach.
Allica’s own research has previously highlighted the challenges facing established SMEs, revealing a £65billion lending shortfall and billions in lost savings interest due to poor rates from big banks.
“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,” said Richard Davies, chief executive officer of Allica Bank.
“Every £1million in lending issued by Allica enables our established SME customers to contribute £2.4million to UK GDP… That’s a direct impact – creating jobs, unlocking investment and helping power growth across all corners of the country.”
Regional impact and future growth
The report shows that Allica’s impact is distributed across the UK, helping to fuel local growth outside of London. The bank’s lending supported nearly 10,000 jobs in the North West, 8,900 in the West Midlands, and 7,700 in the East Midlands. In terms of share of regional employment, the impact was most significant in Wales and the North East.
Allica has grown rapidly since its launch five years ago, originating more than £1.5billion in loans to SMEs last year alone and surpassing an aggregate of £3.5billion in total lending by late 2024.
The bank recently announced its third acquisition, purchasing embedded finance startup Kriya, as part of its strategy to capture 10 per cent of the established SME finance market by the end of 2028. Allica aims to advance an initial £1billion of working capital finance to SMEs, building on its momentum as a market leader in the sector.
