Paragon Bank has reported a 7.3% increase in new loans in its SME lending business during the first half of its financial year.

For the six months ending 31 March 2025, Paragon registered £247m ($334m) in SME lending loans, compared with £230.2m in the same period a year ago.

Asset finance, a key component of the division, saw an 11.1% growth to £169.9m, surpassing the market average of 6.4%.

Additionally, the period marked Paragon’s first loans under the UK Government’s Growth Guarantee Scheme, with £18.3m in loans written under this initiative.

The broker portal, which was launched two years ago as part of Paragon’s digitalisation strategy, has continued to positively impact the business.

Nearly 60% of applications are input directly, up from just under 50% in the prior year. The system currently manages almost 90% of new SME lending business.

The new system utilises various tools to support decision-making, with one in three cases on the platform eligible for auto-decisions.

This allows specialist underwriters to focus on more complex cases. These changes have reduced processing time from application to approval by 60% year-on-year, the company highlighted.

Paragon SME lending managing director John Phillipou said: “Despite a difficult environment for SMEs, with increased costs and the disruption of global events, they continue to show ambition and resilience, and we were pleased to record an increase in lending, particularly within asset finance.

“Additionally, our broker portal continues to drive improved performance, with more applications going through the system, plus conversion and approval rates increasing. We have commenced the replatforming of our back-end system, which will drive further efficiencies and improved customer experience.”

Paragon posted a 5.2% growth in pre-provision profits and a 2.1% growth in underlying profits, which increased to £149.4m.

The loan book climbed by 4.9% to £16bn, with lending rising 11.4% to £1.38bn, including growth in development finance and buy-to-let mortgages.

Last month, Paragon raised the automatic decision-making threshold for SME lending from £100,000 to £150,000, which the lender describes as “reflecting ongoing investment in technology” and a deepening focus on faster credit delivery.