There's £80bn to Fight Tariffs. Why Aren't UK SMEs Using It?

Forty thousand UK companies export goods to the United States. Since February, they've been paying a 15% tariff on everything they ship. Paragon Bank research puts the average knock-on cost at £17,000 per SME — and that's before you count the businesses further down the supply chain absorbing rising input prices, longer lead times, and shrinking margins.

Meanwhile, the UK government has quietly assembled one of the largest SME finance packages in a decade: £80 billion of UK Export Finance capacity, £11 billion in automatic bank guarantees, and a Growth Guarantee Scheme that's already deployed £2.5 billion. Yet only 27% of eligible exporters are using any of it.

If tariffs are squeezing your business and you haven't explored what's available, you're absorbing costs you don't have to.

The Tariff Damage in Numbers

The headline rate — 15% on UK goods entering the US — is only part of the picture. Paragon Bank surveyed 1,000 UK SMEs and found the pain is spreading well beyond exporters:

• 21% of SMEs now say tariffs are their single biggest business challenge — ahead of labour shortages, inflation, and regulation
• 25% report direct hits to profit margins
• 30% are paying more for imported goods, even if they don't export themselves
• 28% face supply chain disruption
• 56% of financial decision-makers report up to a 40% drop in their sales pipeline

Phil Hughes, Deputy Managing Director of SME Lending at Paragon Bank, put it plainly: "Trade tariff disputes have created significant challenges for SMEs, not only those directly involved in import and export markets, but also businesses further down the supply chain."

The sectors hit hardest? In transportation and storage, 36% of SMEs cite tariffs as their primary challenge. In manufacturing, it's 25%. But even service businesses are feeling it — rising input costs from suppliers who import materials push up prices across the entire chain.

William Bain, Head of Trade Policy at the British Chambers of Commerce, warned that the 40,000 UK goods exporters to the US face an estimated £2–3 billion in additional costs. "This will be bad for trade, bad for US consumers and businesses and weaken global economic growth," Bain said.

This is landing on businesses already absorbing £25,850 more in annual employment costs from April's National Living Wage and NIC increases. The compounding effect is why 74% of finance brokers now expect SME finance demand to rise over the next six months.

The £80bn War Chest Nobody's Using

Here's the disconnect. The government hasn't been sitting idle — it's assembled a genuinely significant package of SME finance support. But awareness and uptake are shockingly low.

UK Export Finance: £80bn capacity, 27% usage

UKEF's lending and guarantee capacity was increased by £20 billion to £80 billion as part of the government's first trade strategy since Brexit. Tim Reid, UKEF's Chief Executive, said the expansion "unlocks billions of pounds to help UK businesses compete to win overseas contracts."

UKEF now targets supporting 1,000 SMEs annually by 2029, up from just 200 in the previous financial year. And 74% of the businesses it supported in 2024–25 were SMEs.

Yet while 79% of exporters know UKEF exists, only 27% report using it. That's a £58 billion gap between capacity and utilisation.

The £11bn automatic guarantee scheme

In January 2026, UKEF and the UK's five largest banks — Barclays, HSBC, Lloyds, NatWest, and Santander — launched an £11 billion lending package specifically for SME exporters. The key features:

• UKEF provides automatic guarantees of up to 80% on eligible working capital facilities
• Banks can apply the guarantee automatically for facilities up to £10 million
• No complex application to UKEF required — your bank handles it
• HSBC alone pledged £3 billion through the scheme

Business Secretary Peter Kyle called it a step to ensure "British businesses have the means, motive, and opportunity to succeed." The five participating banks collectively serve half of all UK businesses — so there's a good chance your existing bank is already signed up.

Growth Guarantee Scheme: £2.5bn deployed, extended to 2030

The British Business Bank's Growth Guarantee Scheme has now deployed £2.5 billion in lending, with 69% going to businesses outside London and the South East. It covers loans up to £2 million and has been extended through March 2030. If tariffs are creating cash flow pressure but you're not an exporter, this is the scheme to look at.

Five Finance Tools That Beat Tariff Pain

The right response to tariffs isn't just to absorb the cost or pass it to customers — it's to finance your way through the disruption so you come out the other side with your supply chain, margins, and growth plans intact. Here's what's available:

1. Trade finance

Purpose-built for businesses buying or selling internationally. Trade finance can fund the gap between placing an order with an overseas supplier and getting paid by your customer — exactly the gap that tariffs are stretching wider. Letters of credit, supply chain finance, and import/export facilities all fall under this umbrella.

2. Invoice finance

If tariffs are slowing your customers' payment cycles or tightening your cash flow, invoice finance unlocks the cash tied up in your outstanding invoices immediately — typically 80–90% of the invoice value within 24 hours. The UK market now has £21 billion advanced at any given time, and rolling monthly contracts have replaced the old 12-month lock-ins.

3. Asset finance

Need to invest in new equipment, vehicles, or machinery to adapt your supply chain — perhaps reshoring production or switching suppliers? Asset finance spreads the cost over time without tying up working capital. FLA data shows record SME lending of £24 billion in 2025, with IT and business equipment finance up 4.1% as businesses invest in automation and efficiency.

4. Working capital and unsecured business loans

For general cash flow pressure from rising input costs, an unsecured business loan of £10,000 to £500,000 can bridge the gap without putting property on the line. Decisions come in days, not weeks. Challenger banks like Allica, iwoca, and Funding Circle are actively deploying capital while high street banks reject 56% of applications.

5. Merchant cash advances

If tariffs are eating into margins on an otherwise healthy revenue stream, a merchant cash advance provides a lump sum repaid as a percentage of future card sales — so repayments flex with your actual revenue rather than fixed monthly amounts.

The common thread? None of these require you to wait until your business is in distress. The businesses that finance proactively — to invest in supply chain resilience, lock in stock at pre-tariff prices, or bridge a working capital gap — come out stronger. As iwoca's Giovanni Contratti noted, 58% of finance brokers cite increased running costs as their SME clients' biggest concern right now. The demand signal is there. The finance is available.

Why Most SMEs Don't Access This

Three reasons keep coming up:

They don't know it exists. UKEF has £80 billion of capacity and most business owners have never heard of it. The £11 billion automatic guarantee scheme launched in January with minimal fanfare. The Growth Guarantee Scheme is extended to 2030 but uptake remains a fraction of what's available.

They assume they won't qualify. The British Business Bank's own research shows that a significant proportion of SMEs self-select out before even applying. With high street rejection rates at 56%, many founders assume the whole market has said no — when in reality, one lender's rejection means nothing about the 300+ others.

They go to one bank instead of the whole market. A business dealing with tariff pressure might approach their bank for a loan, get declined, and stop. A whole-of-market broker places your profile across dozens of lenders simultaneously — challenger banks, non-bank lenders, government-backed schemes, specialist trade and invoice finance providers — and comes back with the options most likely to be approved.

What to Do Now

If tariffs are affecting your business — directly or through your supply chain — here's a practical starting point:

1. Quantify the impact. What's the actual cost: higher input prices, slower sales, delayed payments? A specific number makes the finance conversation concrete.

2. Match the product to the problem. Rising import costs might need trade finance. Cash flow squeeze might suit invoice finance. Equipment investment to adapt your supply chain calls for asset finance. A general working capital buffer might be an unsecured loan or secured facility. Don't default to "bank loan" — the right product depends on the problem.

3. Check government-backed options first. The Growth Guarantee Scheme, UKEF automatic guarantees, and the Small Export Builder scheme all reduce lender risk, which means better terms for you. Ask whether your application qualifies.

4. Don't apply to one lender at a time. Each rejection costs you 4–6 weeks and a hard credit search. A broker application goes to the whole market simultaneously.

The £80 billion is there. The tariffs aren't going away. The question is whether you use what's available — or keep absorbing the cost alone.

We work with 300+ UK lenders across every finance vertical — trade finance, invoice finance, asset finance, unsecured loans, and more. No upfront fees, soft credit check first. Get in touch and we'll show you what you qualify for across the whole market.