Paragon Bank raises threshold for automatic SME lending decisions

Paragon Bank has announced an immediate increase in its threshold for automatic lending decisions within its SME Lending division, raising the cap from £100,000 to £150,000. This strategic shift is designed to accelerate and simplify access to finance for small and medium-sized enterprises (SMEs), particularly those applying for funding tied to hard assets under hire purchase or finance lease agreements.

The decision marks a significant step in the bank’s broader digital transformation journey. By leveraging enhanced automated credit decisioning tools, Paragon is positioning itself to offer quicker lending outcomes to a greater number of SMEs, without compromising the integrity of its credit assessment protocols.

According to John Phillipou, the Managing Director of SME Lending at Paragon Bank, this move is underpinned by two primary motivations: a sustained investment in technology and a commitment to better serving the needs of the UK’s growing SME sector. He emphasized that the increased limit is not just a reflection of technical advancement, but also of the bank’s evolved understanding of its customer base. The new policy is expected to bolster support for SMEs, delivering faster funding while upholding rigorous credit controls.

This development coincides with a broader industry trend. Specialist and challenger banks, such as Paragon, are becoming increasingly influential players in the SME finance landscape. Recent data from the British Business Bank shows that in 2024, these institutions were responsible for 60 per cent of gross lending to smaller businesses—a record share—at a time when traditional high street banks are retreating from this segment.

Paragon’s advancements in automation, artificial intelligence, and data-driven workflows are pivotal in reducing bottlenecks during the loan application process. The raised threshold not only boosts the volume of loans eligible for instant decisions but also informs improvements to the manual underwriting process, enhancing both speed and precision.