# How hybrid capital is powering a new era for SME lending

- Link: https://www.directorstalkinterviews.com/how-hybrid-capital-is-powering-a-new-era-for-sme-lending/4121202970
- Published: 2025-06-19T15:30:00+01:00
- Author: Amilia Stone

Rising momentum in SME lending is proving beneficial for businesses across the UK.
According to UK Finance, high‑street banks saw a 30 % year‑on‑year increase in loans
to firms with annual turnover under £2 million during Q1 2025, reaching nearly £
4.6 billion, the highest level since mid‑2022. This marks the sixth consecutive 
quarterly rise, complementing growth in non‑bank financing. Despite the overall 
SME credit market remaining £90 billion below pre‑Covid norms, the expansion is 
encouraging.

Government and lenders are also steering capital toward more sustainable business
models. Lenders increasingly favour SMEs with credible net‑zero plans, creating 
a virtuous cycle between funding access and environmental responsibility. Meanwhile,
ministerial engagement aims to boost credit availability and address loan rejection
rates, currently under 50 %, by expanding the British Business Bank guarantee scheme.

In this thriving landscape, Duke Capital is positioning itself as a versatile and
supportive partner for SMEs. The Guernsey‑based hybrid capital specialist provides
a blend of debt and equity in long‑dated, flexible structures that enable management
teams to fund acquisitions, refinancings and growth initiatives without losing control.

Recent announcements highlight Duke’s momentum:

 * A £2 million follow‑on investment in Tristone Healthcare supports its acquisition
   of Serenity Care Homes, boosting Duke’s total financing to £21.2 million alongside
   a new 28.4 % equity stake.
 * A £3 million injection into New Path Fire & Security helps facilitate their bolt‑
   on acquisition of Elite Entrance Systems, increasing Duke’s shareholding to around
   20.9 %.
 * Duke reports recurring quarterly cash revenues of approximately £6.5 million 
   for Q4 FY25, a solid 12 % increase year‑on‑year, reflecting the strength of its
   hybrid financing model.
 * Notably, Duke continues to benefit from the resurgence in SME lending and green
   finance trends, having recently highlighted [sustainability](https://www.directorstalkinterviews.com/sustainability-green-stocks-news)‑
   driven revenue growth in their commentary.

All signs point to a prime moment for hybrid capital providers. As traditional lenders
cautiously return, there remains a structural lending shortfall in the SME sector
that agile models like Duke’s are well-placed to fill. Their evergreen, royalty‑
style approach offers SMEs the flexibility they need for sustained growth, while
aligning returns with long‑term performance.

Duke’s ongoing follow‑on investments and healthy revenue trajectory attest to both
market opportunity and solid execution. Their model supports businesses through 
buy‑and‑build strategies, management buy‑outs, refinancing and equity restructuring,
all under one unified offering . In doing so, they not only contribute to the revival
of SME finance but also position themselves at the forefront of a positive, sustainability‑
driven transformation in the sector.

The SME finance landscape is evolving rapidly. Greater bank involvement and a renewed
focus on green credit are shifting the dynamics. In this context, Duke Capital’s
hybrid capital platform offers uniquely adaptable solutions that meet the multifaceted
needs of growing firms, while delivering recurring returns and supporting long‑term
value creation across its portfolio.

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