Activity turns down while pricing turns back: the squeeze that the insolvency print still won’t show 🤷♂️
UK B2B credit and lending news digest, 21–27 June 2026
Summary
UK private-sector activity tipped into contraction this week. The flash S&P Global UK Services PMI fell to 48.7 in June from 49.3 in May — a second straight month below 50 and the steepest services downturn since January 2023 — while manufacturing eased to a three-month low of 53.1.(1) That is the number that matters: the real economy is now visibly softening on the services side at the same moment services inflation is stuck at 3.7%. Demand is falling while prices are not — the combination credit books like least.
Two threads frame the week around that anchor. First, a divergence from last week’s read: seven days after a 7–2 hawkish hold, swap rates eased on the weak activity data and lenders resumed cutting — Moneyfacts counted around 20 lenders reducing rates in the week to 26 June, with Barclays, NatWest and HSBC all trimming.(2)(3) The assumption that funding costs had stopped falling was tested and, at the margin, reversed: pricing is competing harder even as the base rate sits still. Second, the late-payment evidence base hardened — R3’s Q1 business-health read (Creditsafe data) shows 1.57 million UK businesses now carrying overdue invoices and 17.48 million overdue invoices in total, up 3% year on year, with wholesale, retail and food services among the most pressured.(4)
Third, and the least-covered layer: the trade-account providers Grand serves are where that late-payment stress lands first. Builders’ merchants and wholesalers are the largest extenders of trade credit in the real economy; their Q1 volumes were already down 8.1% year on year, and the rising overdue-invoice count is, read from their side of the ledger, a receivables book getting riskier between the credit check and the missed payment.(4)(11) Trade-credit insurers are seeing the same thing early: late-payment notifications are rising ahead of any claims spike, a pattern that historically leads claims by two to three quarters.(7)
What it adds up to: activity is turning down while pricing is turning back up the competitive ladder. Lenders are competing on price in a market where demand is softening and the forward risk signals — contracting services output, deepening late payment, sticky services inflation — all point the same way, even as the backwards-looking insolvency headline (May: 1,868 company insolvencies in England and Wales, a fourth consecutive year-on-year fall) keeps reading calm.(5) The discipline this week is to treat the insolvency print as the lagging number it is, and to price off the activity and payment data that are deteriorating now.
Key developments
- UK services activity contracts. The flash UK Services PMI fell to 48.7 in June (from 49.3), a second consecutive sub-50 reading and the steepest downturn since January 2023; manufacturing eased to 53.1, a three-month low, though its output sub-index hit a 21-month high of 53.6. Activity softening while services inflation holds at 3.7% is a stagflationary tilt — the demand side weakening without the price relief that would let funding costs fall freely.(1)(6)
- Lenders resume cutting despite the hawkish hold. Around 20 lenders reduced rates in the week to 26 June, including Barclays (up to 20bps), NatWest (up to 26bps) and HSBC (up to 10bps), with Skipton cutting up to 30bps. Swap rates eased on the weak PMI, so pricing fell even though Bank Rate held at 3.75% the week before — the first clear divergence from last week’s “funding costs have stopped falling” read.(2)(3)
- Late-payment base deepens. R3’s Q1 2026 business-health analysis records 1.57 million UK businesses carrying overdue invoices and 17.48 million overdue invoices in total, up 3% year on year; the CPA puts the population above 1.5 million on its own measure. Wholesale, retail and accommodation/food services are among the most exposed — the real-economy creditor layer, not the banks.(4)(8)
- Motor-finance redress clock runs down. The FCA’s confirmed scheme covers around 12.1 million agreements, roughly £7.5bn of compensation and about £9.1bn of total sector cost; a key implementation deadline falls on 30 June for agreements from 1 April 2014. The scheme remains under legal challenge, which the FCA says it will defend. The funding and appetite read-across to motor-exposed specialists still holds.(9)
- BNPL regulation goes live imminently. The temporary-permissions window for deferred payment credit closes on 1 July and formal FCA regulation takes effect on 15 July, bringing affordability checks, Consumer Duty and Ombudsman access. For merchant-facing credit this is a checkout-economics event landing now, not later.(10)
- Trade-account providers under pressure as creditors. Builders’ merchant volumes were down 8.1% year on year in Q1, Travis Perkins’ Q1 merchanting revenue fell 2.3%, and industry surveys show most firms selling on credit have already shortened terms and leaned harder on trade-credit insurance, with bad-debt write-offs near £8 in every £100. Howdens (group sales +3.7% over four months) remains the resilient counter-signal.(11)(12)(13)
- Specialist working-capital lenders still growing into the bank gap. Time Finance’s 25 June trading update put its gross lending book at a record £250m at 31 May (a 20th consecutive quarter of growth), led by invoice finance (£78m, +20%) and hard asset finance (£129m, +22%) — the exact working-capital products the big banks are exiting.(24)
Market signals
Credit quality and risk. The most useful new datapoint this week is the activity print, not the insolvency one. Services output contracting (48.7) alongside a deepening overdue-invoice base (up 3% year on year) is a forward signal of stress building in receivables books before it reaches a court.(1)(4) The May insolvency headline — 1,868 in England and Wales, a fourth consecutive year-on-year fall — remains the lagging number; it is flattered by comparison with a weak 2025 and sits well above pre-2020 norms.(5) Allianz Trade reads the cycle the same way: UK insolvencies plateauing around 26,550 in 2026 (roughly 30% above pre-pandemic) before a larger fall only in 2027 — a high floor, not a turn down.(7)
Credit supply and lending conditions. Supply is competing on price again. The swap-rate easing that followed the weak PMI let around 20 lenders cut in the week to 26 June, and the buy-to-let and bridging price war that began earlier in the month broadened.(2)(3) The signal is not more capital — it is cheaper capital chasing a shrinking pool of placeable demand. The channel mix continues to narrow at the bank end (all four big banks now out of SME invoice factoring after Lloyds’ exit), pushing working-capital demand toward specialists and fintechs even as headline pricing falls.(14)
Where risk is building
- Services-exposed B2B trade. June’s services contraction (48.7) is the first hard sign that the demand softness flagged for months is now showing in output, not just sentiment. For lenders and creditors exposed to B2B services — professional, logistics-support, hospitality-adjacent — this is the quarter the receivables assumption written on “flat” demand needs revisiting against “falling”.(1)
- Trade-account providers — builders’ merchants and wholesalers. The biggest trade creditors in the built-world economy are squeezed from both sides: merchant volumes down 8.1% in Q1 while their customers pay slower — wholesale and retail sit second only to construction in the distress tables. When a merchant’s sales fall and its debtor days stretch, the risk concentrates in its open trade-account book — the exposure that builds after onboarding, not at it.(4)(11)(15)
- Consumer-facing sectors — retail and hospitality. Begbies continues to flag retail and hospitality as already in deep distress with little headroom; radical retailer restructurings are now routine. April’s wage, business-rates and energy step-ups are still working through. For lenders and asset financiers exposed to pubs, restaurants and shops this is a repricing already due, not a future risk.(16)
- Construction’s lower tiers. Output is broadly flat and Tier 1 contractors pay on time, but the sector still carries the worst late-payment gap in the economy (around 38 days beyond terms), and the coming retention ban, 60-day cap and 8% statutory interest will tighten contractor cash flow in the transition. Reprice the sub-tier specialist trades, not the Tier 1s.(17)
Friction signals — where credit is failing
No lender announced a public pullback this week. The constraint is structural and built-in rather than declared.
- Mainstream banks remain out of working capital. With all four big banks now out of SME invoice factoring after Lloyds’ exit, firms whose cash is trapped in 60–90-day receivables are pushed toward specialists and fintechs, often at higher cost. The friction is in availability and price, not headlines — and it bites hardest exactly where the overdue-invoice count is rising.(14)(4)
- Higher-LTV property deals still hard to place. Specialist property volumes are at records, but the capacity — and this week’s rate cuts — sit below roughly 75% LTV; deals above that line remain difficult to place even where headline rates look available.(3)
- Declined applications as a structural leak. The government’s SME-finance review and a CFIT/FXE-led data-sharing coalition estimate better data could unlock around £5bn a year by halving declined applications — a measure of viable demand that currently fails to place. The friction is in information, not appetite.(18)
- Fraud raises the cost of saying yes. Cifas misuse-of-facility markers up 43% in 2025 mean acceptance on fast-growing, new-to-book unsecured SME lending now carries a higher fraud tax. The consequence is operational: tighter KYB at onboarding, upward pressure on risk-based pricing in sub-£50k facilities, and loss-rate assumptions on this year’s new lending that should be revisited before the book ages.(19)
Who is doing what
The big four. Lloyds made no new move this week and its stance is unchanged — last week’s closure of its SME invoice-factoring unit completes the big-bank retreat from labour-intensive working capital. Barclays cut residential mortgage pricing (up to 20bps) in the week to 26 June; NatWest made the largest big-bank cut (up to 26bps) and remains the most SME-focused of the four; HSBC trimmed up to 10bps. Read across the four: three of the four actively cut pricing as swaps eased, in the same week activity data turned down. None is tightening headline appetite ahead of the turn; the only real narrowing remains the undeclared, structural exit from working-capital products.(3)(14)
Lenders tightening. No lender publicly tightened headline appetite this week. The only tightening is indirect — the completed big-bank exit from factoring and the continued selective constraint above ~75% LTV in specialist property, neither announced as a pullback.(14)
Lenders expanding. Expansion this week was in price, not fresh capital raises — a broadening buy-to-let and bridging rate war below the 75% LTV line, plus one named specialist scaling its working-capital book:
- The Mortgage Works (Nationwide’s BTL arm) cut selected BTL and limited-company rates by up to 25bps, effective 27 June.(20)
- Glenhawk cut its whole bridging range by up to 8bps, with unregulated rates from 0.68% per month.(3)
- Skipton trimmed up to 30bps across its book, including its 95% LTV deal.(3)
- Time Finance confirmed a record £250m lending book on invoice finance +20% and asset finance +22% — a named specialist scaling precisely where the big banks have stepped back.(24)
- Neobank / SME-fintech sweep: iwoca, Funding Circle, Capital on Tap, Allica, Starling, Tide and OakNorth made no new public funding moves this week, and the recent raises across the universe all predate this window. The clearer live thread is consolidation at the edge of the universe: Liberis was acquired by Nordic Capital and is merging with Qred; Zempler Bank’s sale to The Access Bank UK has cleared regulatory approval; Atom Bank is being circled by Yorkshire and Leeds building societies; and Hokodo has closed — on top of Shawbrook’s earlier absorption of ThinCats. The challenger and B2B-fintech edge is being acquired or absorbed into scaled players, leaving the larger survivors to absorb displaced working-capital demand.(21)(25)(27)
Capital and deployment
The funding signal this week is about price, and it reversed last week’s. The hawkish hold had implied funding costs were flat-to-rising; instead the weak flash PMI pulled swap rates lower and lenders cut into the move.(1)(2) Capital is marginally cheaper than a week ago and risk-selective — the easing is being spent on price competition below 75% LTV in BTL and bridging, not on extending appetite up the risk curve. The capital-markets calendar stayed quiet at the specialist end, with no major new bond or warehouse line from the named universe in the week.
Deposit competition stays live for the same reason: with the cut path now looking nearer again, deposit-takers have a little more room to let savings pricing drift, but the floor under funding costs is softer than it looked seven days ago.(9) One layer worth watching as the cycle turns: debt funds now supply the majority of UK commercial development finance, and their disclosed default rate (around 20% on the latest Bayes CRE data, versus ~6% market-wide) sits well above the bank book — the part of this market least visible in the weekly headlines.(26)
From the industry
Brokers first. The placement map is the live issue, and Credit Week (Celtic Manor, 23–25 June) was the week’s practitioner set-piece — the read from the floor is collections and credit-management capacity being built for a harder second half. With mainstream banks out of factoring, specialist property capacity below ~75% LTV, and roughly a third of broker clients already turned down once, the value is in structuring and routing. Easier to place this week: BTL and bridging below 75% LTV, plus small working-capital and asset-finance deals. Harder: higher-LTV specialist property and bank-channel working capital.(18)(22)
Suppliers and how fast they get paid. The Fair Payment Code — the live framework under the Small Business Commissioner — remains the benchmark, with gold/silver/bronze tiers on 30- and 60-day thresholds. The government’s confirmed reform package (hard 60-day cap, mandatory 8% statutory interest, retention ban, statutory dispute window) firms the direction even before it bites. With construction running about 38 days beyond terms at the sub-tier, the gap between top-of-chain discipline and lower-tier stress tells suppliers exactly where to tighten: the smaller specialist trades, not the Tier 1 contractors.(17)(23)
Specialist and bridging market — competing on price, not retreating. The clearest pattern this week was the broadening BTL and bridging rate war: The Mortgage Works, Glenhawk and Skipton, on top of earlier-month cuts from LendInvest, Landbay, Fleet, Molo and Keystone. Specialists are adding capacity and cutting price below the 75% LTV line — the squeeze is on higher-borrowing deals, not on appetite to lend overall.(2)(3)(20)
Asset and invoice finance. The specialist working capital end stays active behind the bank retreat. Time Finance’s record £250m book and Simply Asset Finance’s NatWest/Lombard-funded scaling sit alongside independents (Praetura, Bibby, IGF, Ultimate Finance, Novuna) holding the invoice-finance and ABL ground the big banks are vacating. As the last big bank leaves factoring, this is the channel SMEs with receivables tied up in 60–90-day terms are routed to.(24)(14)
Trade-account providers and trade credit. This is where the week’s clearest real-economy signal sits, and it rarely makes the lender-focused headlines. R3’s Q1 read puts 1.57 million businesses on overdue invoices and 17.48 million overdue invoices in total, with wholesale and food services among the most pressured — the same businesses that extend the most trade credit.(4) That overlays a weak Q1 for builders’ merchants (BMF 2026 forecast trimmed to 2.3%; BMBI value sales −3.2%, volumes −8.1%) and Travis Perkins’ merchanting revenue down 2.3%, against Howdens’ +3.7% as the in-channel divergence.(11)(12)(13)
The behavioural shift matters more than the sales prints. Credit-management surveys point to most firms selling on credit having already shortened terms and tightened follow-up, with trade-credit-insurance take-up rising and bad-debt write-offs near £8 in every £100; in wholesale, consolidation is the defensive response. For a trade-account provider, the exposure that bites is the customer that passed the initial check and then deteriorates — slowing payments, stretching debtor days, drifting toward a CCJ before any insolvency print. Onboarding KYB is necessary but not sufficient; what protects the receivables book is continuous monitoring of live trade accounts while exposure is building, not an annual re-check.(13)(15)
Credit insurance. Insurers are selective rather than retreating, and the leading signal this week is theirs: late-payment notifications are rising across several sectors ahead of any claims spike — a pattern that historically precedes a claims uptick by two to three quarters — with the three dominant carriers (Allianz Trade, Atradius, Coface) still active. Cover will tighten sector-by-sector first: hospitality, retail, smaller construction trades and import-heavy wholesale are the likeliest.(7)
Wider regulatory agenda. Three threads are firming at once: BNPL goes live on 15 July; the motor-finance redress scheme hits its 30 June implementation deadline under live legal challenge; and the government’s SME-finance review plus the FCA’s Open Finance work point toward more required credit-data sharing. The direction of travel is more visibility and portability of SME credit information, not less.(9)(10)(18)
How small firms feel. The FSB Small Business Index remains subdued, with members still citing April’s cost step-up — and June’s services contraction now gives that sentiment a hard-data counterpart. Set against still-growing specialist lending, that is the tension of the period: firms are borrowing while feeling worse, and borrowing out of necessity tends to be riskier than borrowing to grow.(1)
Where Grand fits. As well as powering underriting for some of the most forward B2B lenders, Grand also sits squarely in this gap for trade-account providers: handle the credit check at onboarding, then keep watching what happens while exposure builds — the slowing payments, stretching debtor days and early distress signals that precede a write-off on an open trade account. As merchants and wholesalers tighten terms, late payment deepens and the bank channel stays out of working capital, continuous monitoring of live customers is the protection a one-off check can’t give. See the latest at heygrand.com.
What this means
- Where risk is rising: in services-exposed B2B trade now that activity has tipped into contraction, in construction’s lower tiers, in consumer-facing retail and hospitality, and — most under-watched — in the open trade-account books of merchants and wholesalers whose volumes are falling while overdue invoices climb. The backwards-looking insolvency number fell again; every forward signal did not. Trust the forward signals.(1)(4)(11)
- Where credit is flowing — and where it’s stuck: flowing, cheaper than a week ago, to landlords and bridging borrowers via specialists cutting price below 75% LTV; stuck in bank-channel working capital, with all four big banks out of factoring and the overdue-invoice base widening.(3)(14)
- Who’s tightening vs growing: specialists and challengers are growing and cutting price below 75% LTV, and three of the big four cut pricing this week as swaps eased; the only real tightening is the mainstream banks’ structural exit from working capital and the motor-finance squeeze on exposed specialists.(3)(9)(14)
- What genuinely changed this week: two things. Activity turned down — services into contraction at 48.7 — and, against last week’s read, funding costs resumed falling as swaps eased and around 20 lenders cut. The economy is softening and money got marginally cheaper in the same week, with the risk that cheaper pricing is being written into a weakening demand base.(1)(2)
Operator actions
Where the week’s signals appear to be landing for credit operators — observations on the direction of travel, not recommendations.
- On demand: the services contraction points toward receivables assumptions written on “flat” B2B demand looking optimistic; teams are revisiting demand inputs for services-exposed counterparties rather than waiting for the insolvency data to catch up.(1)
- On pricing: with swaps easing and around 20 lenders cutting, competition has resumed below 75% LTV — the direction of travel looks like margin compression on new BTL and bridging written into a softening market.(2)(3)
- On trade accounts: for businesses extending them, rising overdue invoices and stretching debtor days concentrate risk in the existing book — the weighting is toward terms on new wholesale and construction customers, and toward continuous monitoring over annual re-checks.(4)(11)
- On fraud and unsecured SME lending: with misuse-of-facility fraud up 43% and concentrated in the new-to-book segment, KYB rigour and loss-rate assumptions on sub-£50k unsecured facilities are drawing more scrutiny as books written this year begin to age.(19)
- On motor finance and BNPL: the 30 June redress deadline and the 1/15 July BNPL milestones are landing now; funding-line and compliance work is front-loading at exposed specialists and merchant-facing credit, not deferring.(9)(10)
- On monitoring more broadly: with activity turning down and fraud rising, continuous portfolio monitoring rather than renewal-point checks is what tends to surface stress before it reaches the insolvency print — the gap Grand is built for.
Week ahead
- 30 June — BoE Money & Credit (May): next directional read on corporate and SME lending availability.
- 30 June — Motor-finance redress implementation deadline (FCA): key date for agreements from 1 April 2014.
- 1 July — BNPL temporary-permissions window closes (FCA); 15 July is go-live.
- Early July — Insolvency Service company insolvencies for June: the first month that might begin to reflect the services contraction.
- Mid-July — FLA monthly statistics: tests whether the record asset-finance pace held into Q2.
- Ongoing — final June PMIs and any read on swap rates and the rate-cut path; oil and the Middle East as the main outside influence.
References
(6) ONS — Consumer price inflation, UK: May 2026 (CPI 2.8%; services 3.7%; core 2.6%)
(10) FCA — Regulating Buy Now Pay Later (live 15 July 2026; temporary permissions close 1 July)
(15) The Grocer — Big 30 wholesaler report 2026; wholesale consolidation (Bestway/Dee Bee)
(19) Cifas — Fraudscape 2026 (misuse-of-facility cases up 43% YoY)
(22) Credit Strategy — Credit Week 2026 (Celtic Manor, 23–25 June; Credit Awards 24 June)
(23) Small Business Commissioner — The New Fair Payment Code; gov.uk — Late-payment consultation response (60-day cap, 8% statutory interest)
Shout-out to the credit and underwriting leaders on leading from the frontline, whose companies were referenced this week
Mark Richens — Chief Credit Officer, iwoca, Ajmal Raja — Chief Credit Officer, Funding Circle, Stephanie Parker — Credit Risk Director, Capital on Tap, Neil Evans — Head of Credit Risk, OakNorth, Alan Dunmur — Chief Risk Officer, Allica Bank, Cyrille Salle de Chou — Chief Risk Officer, Starling Bank, Sachin Hirani — Head of Credit Risk Strategy, Tide, Ross Bland — Lead Credit Manager, Atom Bank, Peter Moore — Head of Credit & Model Risk Oversight, Zempler Bank, Alex Ivison — Chief Risk Officer, Liberis, Greg Beamish — Chief Credit Officer, ThinCats, Karl Brown — Credit Manager, Time Finance, Selma Cavalic — Head of Credit Risk, Simply Asset Finance, Tom Steer — Head of Underwriting, LendInvest, James Cooper-Smith — Underwriting Team Lead & Credit Manager, Landbay, Diane Mitchell — Credit Director, Fleet Mortgages, Natasha Coveney — Mortgage Underwriting Manager, Molo Finance, Sam Longhurst — Head of Underwriting Support, Keystone Property Finance, Jude Miranda — Bridging Credit Manager, Glenhawk.
