Paragon Development Finance has launched a new light industrial funding product, aimed at experienced developers delivering units of 5,000 sq ft or less.
The facility offers funding up to £10 million over terms of up to 24 months and is designed to support SME developers responding to rising demand for modern, flexible industrial space across the UK.
Demand for small industrial units remains high. Occupational demand reached 37.4 million sq ft in 2025, the highest level since 2022 and 12% above the pre‑pandemic five‑year average. Occupier appetite is particularly high among SMEs, trades firms, e‑commerce retailers and hybrid companies seeking functional, flexible and well‑located space.
ONS data further signals ongoing demand for the light industrial sector. Quarterly business demography figures released in January show business creation activity picked up at the end of 2025, with over 71,000 new businesses launched between October and December - a 10% increase year‑on‑year. This rise in active enterprises suggests improving conditions for SMEs and reaffirms the need for accessible, adaptable industrial space as more businesses start up and scale.
Neal Moy, Managing Director of Development Finance at Paragon Bank, said: “Our new Light Industrial product reinforces our commitment to supporting ambitious SME developers and responding to structural shifts reshaping the UK’s industrial landscape.
“Across the country, there is an undersupply for small, flexible and well‑located industrial units, with SMEs increasingly looking to grow, improve their logistics capability or bring production closer to home. By providing specialist finance of up to £10 million over 24 months, we are enabling developers to deliver the high‑quality units that modern businesses need to operate, grow and scale.”
He added: “This new product builds on a series of strategic moves we’ve made in the last year, including a growing footprint in later living, care, PBSA and Build to Rent segments, as well as raising our loan limit from £35 million to £60 million. Light Industrial finance is the next step in ensuring our developer partners have the support, clarity and long‑term relationship focus they expect from Paragon.”
Paragon Development Finance, part of FTSE 250 Paragon Banking Group, continues to strengthen its position across specialist commercial and residential markets, increasing its new business pipeline by 31%, delivering more than £527 million of new lending and loan book growth of 8.6% in its last financial year.
