Half of the UK's mid-sized property developers say they do not align with traditional lending criteria, according to new research from Shawbrook. The findings point to a significant property development finance gap for businesses that have outgrown small-business products but cannot yet access corporate-level solutions.
The research, which examines the challenges, ambitions and funding needs of mid-sized developers, found that 55% feel caught between two worlds: too large for small-business finance, too small for the products aimed at larger firms. Just under half, 48%, find it difficult to source appropriate support, while 45% feel overlooked despite being well-positioned for growth.
Funding gaps with real consequences
The disconnect between developer needs and available products is having a tangible impact. Among those whose current funding is not meeting their needs, 36% say they cannot access the level of capital required. A further 32% cite little or no relationship with their lender as a core part of the problem.
"Property developers face a problem that will be familiar to mid-sized businesses across every sector: they've outgrown the products built for smaller firms, but they don't fit the mould that traditional lenders use for larger ones either," said Terry Woodley, managing director of development finance at Shawbrook (pictured).
"Add in planning delays and tightening regulation, and sourcing the right funding becomes a serious drag on growth. What our research shows is that this isn't inevitable. When businesses at this stage get access to the right specialist support, the results go well beyond the individual firm, unlocking investment, creating jobs and adding real momentum to the wider economy. The 'M' in SME has been overlooked for too long."
Ambition remains high
Despite these barriers, appetite for growth across the sector is strong. Developers say access to the right property development finance would act as a catalyst for expansion, with 31% saying they would hire additional staff, 27% planning to invest in infrastructure and assets, and a further 27% looking to move into new sectors. Some 25% would expand internationally, while 23% would invest in upskilling their workforce.
The research underlines a broader tension in the mid-market: businesses at this stage of growth are generating real economic value but are constrained by a funding landscape that has not kept pace with their needs. For lenders willing to engage with the complexity of this segment, the opportunity is considerable.
