The UK defence sector is expanding faster than at any time in the past decade. With government spending rising toward 2.5% of GDP, thousands of businesses supplying the defence ecosystem are under pressure to scale, deliver, and innovate.
But many face an unexpected obstacle: access to capital.
A growing number of defence suppliers are finding that traditional lenders are reluctant to fund their growth often due to internal policy, ESG constraints, or a lack of understanding of long, capital-intensive contract cycles.
As a result, these businesses are increasingly turning to fintech-backed funding solutions delivered through specialist intermediaries like Finspire, partners who can align finance with operational reality.
The result: genuine, high-performing businesses are no longer waiting for approval from risk-averse banks. They’re using smart, flexible facilities that match the rhythm of their contracts and free them to focus on delivery and expansion.
Why Traditional Finance No Longer Fits
1. ESG and Sector Policy Restrictions
Mainstream lenders often apply broad exclusions to defence-related activity, even when firms are producing non-combat or logistics-based equipment for the UK or NATO.
2. Long Project Cycles and Capital Lock-Up
Defence contracts can run for months before suppliers are paid. Traditional lending models, built for short-term retail trade, struggle to support these cycles.
3. Specialist Collateral
Manufacturing and tooling assets rarely fit conventional collateral frameworks, leaving defence suppliers under-served.
4. Time and Bureaucracy
While contract opportunities move fast, legacy institutions often take weeks, or months, to reach a credit decision.
“For many defence SMEs, getting finance today is harder than winning the tender itself.”
The Rise of Fintech-Enabled Funding
Fintech innovation has changed what’s possible.
Specialist lenders, accessed through our panel of over 250 active partners, now offer funding that aligns with how the defence sector operates:
Supplier pre-funding: Pay key manufacturers upfront.
Working-capital drawdowns: Access funds as milestones are met.
Invoice-linked funding: Release cash the moment you invoice a government or prime contractor.
Revolving facilities: Reuse the same capital across multiple contracts without re-applying.
This new wave of structured finance is built around contract performance and receivables, not rigid balance-sheet metrics.
It rewards delivery capability, not bureaucracy.
The Opportunity for the Defence Sector
The UK is home to more than 7,500 SMEs active in the defence supply chain (ADS Group, 2024). Together they generate over £5 billion annually, yet many still self-fund operations from retained earnings or director capital.
That’s capital sitting idle.
In a market defined by rising demand and contract competition, the ability to deploy external finance intelligently has become a core advantage.
Case Study: Finspire’s 100% Externally Funded Lifecycle Solution
A NATO contractor approached Finspire with a challenge: they had multiple confirmed contracts but insufficient liquidity to fund supplier payments and production without locking up their own cash.
Objective: Create a structure that would finance the entire lifecycle of each contract, from supplier payment to final invoice, without the contractor using their own capital.
Finspire’s Solution: Finspire engineered a bespoke, fully-funded lifecycle facility, combining supplier finance, milestone drawdowns, and invoice funding into a single revolving structure:
Supplier stage: Payments released direct to supplier abroad at contract inception.
Production stage: Further drawdowns aligned with milestones and inspections.
Invoicing stage: Immediate funding upon issuing invoices to the end-client.
Repayment stage: Automated settlement upon payment, resetting the facility for the next contract.
Outcome:
100% of the contract value funded externally.
No internal capital tied up.
The contractor scaled to pursue multiple NATO programmes concurrently.
Cash-on-delivery leverage improved supplier pricing and project margins.
This structure transformed cash-flow strain into a growth engine, creating a revolving, self-liquidating funding loop that supported expansion instead of limiting it.
How Finspire Supports the Defence Sector
Finspire specialises in strategic, contract-aligned finance for SMEs in complex or highly regulated sectors such as defence, engineering, and advanced manufacturing.
What We Deliver
Bespoke structuring: Lifecycle finance designed around your cashflow profile.
Access to a 250+ lender panel: All managed through a single point of contact.
Funding health check: We assess what you can access today and how to optimise it.
One partner, all finance: From working-capital lines to invoice, asset, or tax facilities.
Our mission is simple: give SMEs the same sophisticated funding tools as large primes, without the red tape.
