Funding Circle shares practical insights on how UK SMEs can leverage AI to boost productivity and resilience in 2025
In an era defined by economic uncertainty and rising operational costs, small and medium-sized enterprises (SMEs) are increasingly turning to artificial intelligence (AI) to drive efficiency and innovation. Business lending platform Funding Circle, which has supported over 110,000 UK SMEs, reveals how AI can help small businesses grow smarter, not just faster, in 2025 and beyond.
According to Funding Circle’s latest Impact Report (produced in partnership with Oxford Economics), 65% of SMEs are expecting their business to grow this year, with digital transformation now taking priority over physical expansion. In particular, investment in AI tools is gaining momentum, with UK businesses reporting a 21% increase in AI budgets over the past 12 months.
The rise of AI-powered SMEs
SMEs are increasingly prioritising digital transformation and technology investment over physical expansion while maintaining a strong appetite for growth. UK businesses reported a 21% increase in AI budgets in the past twelve months, showing a growing commitment to using AI.
New research from Amazon Web Services (AWS) shows that 52% of UK businesses are now using AI, up 33% in the past year, outpacing the European average. And 92% of those AI adopters report a direct increase in revenue.
The skills gap challenge
However, a growing digital skills gap threatens to stall momentum. According to AWS’s 2025 AI report, 38% of UK businesses cite lack of AI skills as the main barrier to adoption, up from 29% the previous year. With AI literacy expected to be required in nearly half (47%) of all new UK jobs over the next three years, both employers and employees are prioritising digital upskilling.
For employees, AI stands out as the most in-demand area for upskilling, with 40% of respondents identifying AI as the top priority for training. This growing appetite for AI-related skills reflects the technology’s increasing integration into daily operations, decision-making, and product development across sectors.
Five ways SMEs can use AI to fuel growth:
According to recent data, 59% of startups have adopted AI, compared to just 25% of large enterprises, highlighting how nimble, high-growth businesses are outpacing traditional corporates in embracing emerging technology.
- Automate time-heavy admin: From invoicing to stock management, AI can free up hours every week, time that can be reinvested in growth, customer relationships, and innovation.
- Improve customer experience: AI-powered chatbots and virtual assistants offer 24/7 support, while machine learning can personalise customer journeys to increase loyalty and conversion.
- Smarter marketing: AI tools can help SMEs create tailored campaigns, generate content, and predict customer behaviour, allowing for better outcomes with smaller teams and budgets.
- Streamline recruitment: AI-powered hiring tools can help SMEs screen candidates, analyse CVs, and even support onboarding, reducing time-to-hire and improving talent matching.
- Data-driven decision-making: AI can quickly analyse sales trends and customer behaviour, helping SMEs make strategic choices and optimise campaigns in real time.
Funding the future of AI-driven growth
Despite the opportunities, AI implementation can require upfront investment—from hiring talent and purchasing tools to integrating infrastructure and staying compliant with regulations. Nearly half (48%) of startups cite access to funding as a critical enabler of their tech strategy.
That’s where Funding Circle comes in.
As a leading platform for SME finance, Funding Circle provides fast, flexible funding solutions to help businesses invest in technology and future-proof their operations:
- Quick access to capital: Apply in minutes with decisions in as little as 1 hour and funds typically available within 48 hours.
- Tailored funding options: Choose between Term Loans for long-term investment or FlexiPay to manage short-term costs such as AI tools, subscriptions, or consultants.
- Tech-forward expertise: Funding Circle is actively investing in Generative AI to improve internal operations and customer experience, offering a unique advantage to SMEs seeking an innovation partner.
“We speak to business owners every day who want to work more efficiently and grow sustainably,” says Greig McEwan, CTO at Funding Circle. “AI isn’t about replacing people — it’s about empowering small teams to achieve more. Whether it’s automating admin or finding new customers, AI can help small businesses take back control of their time, scale up, and stay competitive. As AI continues to shape the future of every sector, from retail and healthcare to logistics and finance, small businesses that invest now will be the ones leading tomorrow. Funding Circle is here to help make that investment possible.”
With the right tools, training, and funding, AI has the potential to reshape the UK’s SME landscape—helping entrepreneurs do more with less and build resilient, future-ready businesses.
