By Nick Smith, Reward Funding Group MD

We always believe funding, and the lenders behind it, should be more than a source of money. They should be a key partner that supports ambitious businesses. Now that we’re in 2026, it is clear that the alternative finance landscape is evolving faster than ever. Technology and approaches are changing and client expectations are increasing. Here are five key trends we expect to see in the industry this year.

Throughout 2026, we expect to see alternative finance move from its current position as a ‘backup option’ for SMEs to a default consideration alongside mainstream banks.

There is increasing pressure on traditional lenders, with more regulation and tightened risk models being a key issue. They also struggle to offer funding at the speed needed and often shy away from industries considered a higher risk. Alternative finance providers, like ourselves at Reward Funding, are able to offer more flexible funding options with the speed needed to keep ambitious businesses moving.

The shift here is likely to be driven by the demand for reliability and understanding. Many businesses are experiencing unpredictable lending cycles from banks, seeing increased review times and more risk averse approaches. For many sectors, this has meant the door has been closed before anything has even started.

An obvious trend for 2026 that spans further than just the alternative lending industry, but one that will become increasingly important.

Businesses will embrace and invest in artificial intelligence more, utilising the software to remove mundane tasks. It’s about giving people back the time to do what they do best, work with clients to find fast, flexible funding solutions.

AI should never replace the conversations, trust or expertise that define great alternative lending partnerships. However, it should help to clear the path. Tasks that may have previously taken hours behind a screen can be completed much faster, meaning the ever-important personalised approaches and in-depth discussions can align with business needs and become the norm.

Sectors such as construction, retail and leisure will become an increasingly important element, largely due to mainstream lenders backing away. These sectors have long been facing issues due to seasonal trading periods, complex chains, exposure to economic fluctuations and irregular cash flows.

Alternative lenders like Reward can look beyond standard historic metrics, diving into forecasts and real-time performance. We understand the people, contracts and long-term vision of businesses, providing the flexible funding ambitious operators need to succeed. We don’t avoid complexity, we underwrite it.

More and more SMEs and entrepreneurs now require funding earlier in the business lifecycle. Traditional lenders lean heavily on historic accounts and performance, but that no longer meets the needs of agile, ambitious SMEs looking to grow. Many are early-stage ventures led by experienced entrepreneurs with strong track records in previous businesses, yet for mainstream lenders with tight restrictions and risk averse natures, this doesn’t tick their boxes.

We anticipate a forecast-led approach to become an expectation from SMEs, especially in the current economic climate. Markets remain unpredictable and approaches like this mean funding can be more personalised and flexible. Mainstream lenders rely on proof. We look at a plan and people behind it.

We have already seen an uptick in 2025 and throughout 2026 we expect to see more personalised funding options tailored to different businesses. Revolving credit and flexible working capital solutions will increase in popularity for SMEs wanting the ability to draw down funds as they need them.

We also expect this type of funding option to become more data-driven, with credit limits adjustable based on real-time financial performance. This ties back into the earlier trend around technology, with lenders utilising this to assess data when required, ensuring team members can focus on the client relationship itself.