The Manufacturing Agenda
Understanding the barriers The reasons behind these challenges reflect a mix of internal performance factors and wider market conditions. Three in 10 manufacturers attributed their funding difficulties to lenders tightening credit appetite in the sector, and there’s no doubt that some lenders believe manufacturers – particularly SMEs – can present a higher perceived risk. Traditional lenders can have more rigid lending criteria that rely on a strong trading history or high levels of collateral, which can mean manufacturers face demands for guarantees, or are simply told ‘no’, More than a quarter of manufacturers (27%) flagged the increased cost of borrowing (interest rates, fees, covenants), despite the Bank of England cutting interest rates three times during 2025, while the same proportion said that government support had been reduced. But manufacturers were also clear that many had internal issues that were hampering their ability to access funding, chiefly business performance concerns (e.g. profitability, cashflow volatility) (29%), issues relating to HMRC (e.g. tax arrears, time-to-pay arrangements, or delays in tax credit payments) (28%) and insufficient collateral or security available (25%). After several years of sustained volatility, many manufacturers have experienced pressure on margins, cashflow and balance sheet strength, which continues to influence funding availability.
External market conditions
Lenders tightening credit appetite Increased cost of borrowing Reduction in government support
30% 27%
27%
Internal performance factors
Business performance concerns
HMRC-related issues
Insufficient collateral/security
29% 28%
25%
*Respondents were asked to select up to three.
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