The number and value of equity investment deals in Northern Ireland increased in 2025 more than any other part of the UK according to the British Business Bank’s Small Business Finance Markets report.
The value of equity deals in Northern Ireland soared to £90 million during Q1-Q3 2025, an 83% increase on the same period in 2024, while the number of transactions increased by 35%. These rises were the biggest of any UK Nation and region.
Throughout the UK the report found that gross SME bank lending increased by 9% to £68bn in 2025, making it the second highest level in the past 13 years (2012) after 2020’s covid peak, as credit conditions eased gradually through the year.
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Smaller business finance proves resilient despite headwinds
Business dynamism is showing signs of improvement, with 314,000 start-ups created UK-wide in 2025, up 1% on the previous year, and with a net rise in the overall business population. In Northern Ireland there were 6,115 new firms during this period.
And underlining the strong business resilience in Northern Ireland, the Bank’s report found that 43% of businesses started in 2019 survive beyond the five-year mark. Only the South West region of England performed marginally better with 44% while the UK average was 38%.
Across the UK external finance remains widely used, with around 50% of smaller businesses using external finance in 2025.
Credit cards (19%) and overdrafts (16%) were the most commonly used products in Q3 2025, alongside leasing and hire purchase (13%), reflecting increased use of flexible, short-term finance. This suggests, however, that debt finance is being used for stability rather than growth.
There is an accompanying broader awareness of finance options, with 62% of smaller businesses in 2025 stating they knew where to obtain information on different types of finance, five percentage points higher than in 2024, indicating greater visibility and understanding of the choices available.
Challenger and specialist banks’ market share exceeded big five banks for the fifth consecutive year
A more diverse mix of lenders, products and businesses is reshaping competition, supporting innovation and expanding choice, and the British Business Bank is playing a key role, helping shape the market for lending in the UK as a champion of both challenger banks and alternative lenders.
Challenger and specialist banks accounted for 60% of gross SME bank lending (excluding overdrafts) in 2025, up from 39% in 2012. The growth of non-bank lenders over the past
decade, means over two thirds (68%) of overall SME lending in 2025 comes from either challenger and specialist banks or non-bank lenders.
Since 2013, 28 new providers have entered the smaller business banking market. Of these, 43% are, or have been, British Business Bank delivery partners.
Challenger and specialist banks also continue to play a leading role in technological advancements and have helped facilitate new entrants. Examples of these advancements include ‘bank in a box’, Software as a Service (SaaS), and digital-only finance providers.
AI attracting significant equity investment
AI is attracting a significant share of equity investment. AI companies raised £2.9bn across 323 deals in Q1-Q3 2025, accounting for around two-fifths of total UK equity investment, highlighting a strong investor focus on innovation.
Susan Nightingale, Director Devolved Nations, British Business Bank said: “It is positive to see the increase in the number and value of equity deals in Northern Ireland, but overall, more work needs to be done to raise awareness of the diversity of finance.
“Smaller businesses here have shown great resilience over the last five years, and let’s not forget this period accounts for the pandemic. They have shown a determination to succeed and thrive, creating jobs and investment right across Northern Ireland.
“Help is out there for those seeking finance to continue their business journey. Since its launch, just over two years ago, the £100 million Investment Fund for Northern Ireland has directly invested £30 million into local firms and in December the fund was bolstered by Invest NI with an additional £29.2 million for the debt financing arm of the fund.
“For Northern Ireland entrepreneurs it’s important they have awareness of and access to the right kind of finance to help them on their journey whether that’s starting up or scaling up. This is something the British Business Bank is focussed on.”
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Significant challenges in accessing finance remain for some under-represented groups and geographical areas being tackled directly by the British Business Bank
Businesses located in rural and coastal areas, female and Ethnic Minority-led businesses face greater challenges. There is positive evidence to suggest that increased diversity of senior decision makers leads to a greater likelihood of diverse founders being able to secure investment.
The British Business Bank has recently put in place interventions to address these challenges, including increased commitments for its Nations and Regions Funds, Community ENABLE Funding and additional resources to support a greater diversity of fund managers and founders.
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