Paragon Bank
A FTSE-250 specialist challenger bank whose Commercial Lending arm serves UK SMEs and mid-sized corporates through asset finance, development finance and structured (wholesale) lending.
What they do
Paragon Bank PLC is the deposit-funded banking subsidiary of LSE-listed Paragon Banking Group, organised into Mortgage Lending and Commercial Lending segments. Its Commercial Lending division covers asset finance (hire purchase, finance lease, sale-and-leaseback, refinance and operating lease across construction, transport, agriculture, manufacturing, aviation and renewables), residential development finance for SME housebuilders, SME loans including government-backed schemes, motor finance, and a structured-lending desk that wholesale-funds non-bank lenders. It is an asset-backed, sector-specialist lender rather than a cash-flow or sponsor-leverage house: lending is secured against tangible assets, property under development, or underlying customer receivables.
Where they fit in a lower-mid-market raise
For a 3–15m UK raise Paragon is the right counterparty when the borrowing is collateralised by identifiable assets or receivables: capex-heavy plant, vehicle fleets, aircraft or renewables equipment via asset finance; a residential development scheme (where its single-loan ceiling now reaches 60m); or, for a non-bank specialist lender, a secured revolving warehouse line. Its structured-lending desk publicly indicates revolving credit facilities of 5m-35m, typically up to three years, secured on customer receivables — squarely in and above the 3–15m band. It suits operators who can point to hard security and a clean compliance record, and who value a stable, deposit-funded balance sheet that lends through the cycle.
Where they are not the fit
Paragon is not a cash-flow or leveraged-buyout lender: it does not market unitranche, sponsor-backed acquisition leverage, or EBITDA-multiple term loans for asset-light services businesses. A borrower seeking growth or acquisition capital with no hard asset or receivable collateral, or a holdco-level structural-subordination solution, is a poor fit. Its commercial appetite is channel-specific (asset finance, development, wholesale lending to other lenders) rather than a general-purpose corporate term-loan desk.
Published terms
- Pricing
- Not published
- Speed to terms
- Not published
- Sponsored or sponsorless
- Corporate/developer and wholesale (other lenders); not a private-equity sponsor LBO lender
- How they decide
- Specialist teams per division; delegated authority by ticket + credit committee. Not publicly detailed
- Covenants
- A loose covenant package; Springing covenant, tested only when a trigger is hit, by facility
- Personal guarantee
- Typically required
- Search funds and ETA
- No published route for search-fund or first-time acquirer borrowers
As published by the lender and last reviewed July 2026. Terms quoted on a deal are set by the credit, not by a published band.
The desks that lend
Paragon Bank lends through 3 separate books. Which one reads a deal decides the security, the covenant package and the band, so the question is rarely whether Paragon Bank lends, but which of these would own it.
Structured lending (wholesale RCF to non-bank lenders)
- Facility
- £5m to £35m
- Security
- Senior secured on underlying customer receivables; borrowing-base
- Covenants
- A loose covenant package
- Funds
- Growth · Refinance
- Rules out
- Wholesale only - lends to other lenders, NOT direct operating-company buy-outs; Requires demonstrable track record + compliance culture
Development finance (SME housebuilders)
- Facility
- £1m to £60m
- Security
- First charge over site + debenture; GDV/LTC-based
- Covenants
- Springing covenant, tested only when a trigger is hit
- Funds
- Growth · Refinance
- Rules out
- Property development only; Not operating-company acquisition debt
Asset finance (HP / lease)
- Security
- Charge over financed asset
- Funds
- Growth · Refinance
- Rules out
- Sectors: construction, transport/logistics, agriculture, aviation, manufacturing, green assets
Limits that apply across the firm
Stated limits, taken from Paragon Bank’s own published criteria, beyond the ones each desk carries above. A limit is where a lender starts from, not where it always ends: several of these move on a strong enough credit.
- No appetite in adult, crypto, gambling or weapons
How they sit against the category
- Its published ceiling of £60m is among the 3 highest of the 42 challenger and specialist banks here.
- Like 24 of the 42, it publishes no indicative price — a margin comes from a conversation, not a page.
- It lends through 3 distinct desks, where most firms here run one or two.
Counted across the 42 challenger & specialist banks in this directory, on what each one publishes. What a lender discloses and what it will do are different things.
Questions this page answers
How large a facility does Paragon Bank write?
Published facilities run £1m to £60m. A band is what a lender states it will do, not what it will do on a given credit.
Does Paragon Bank require a personal guarantee?
On Paragon Bank's published terms, a personal guarantee is typically required. What a lender asks for on a given credit is settled in the documents, not by a published stance.
Does Paragon Bank lend to search funds or ETA buyers?
Not on the published evidence. Paragon Bank publishes no route for search-fund or first-time acquirer borrowers. A searcher's route to a lender usually runs through the quality of the target and the equity behind it.
Does Paragon Bank lend to companies without a private-equity sponsor?
Yes. Paragon Bank lends to owner-managed and corporate borrowers, and publishes no private-equity sponsor proposition.
What covenants does Paragon Bank set?
A loose covenant package; Springing covenant, tested only when a trigger is hit, by facility. A covenant package is negotiated on the facility; the published style is where the negotiation starts.
What does Paragon Bank lend?
The published product set is structured lending, development finance, asset finance. Published sector focus is btr, dev-exit, non-bank lenders: property, retail pos, asset finance, sme lending, auto, pre-let, residential development.
On the record
Paragon Bank PLC is authorised by the PRA and regulated by the FCA and PRA, registered on the Financial Services Register under firm reference number 604551, registered office 51 Homer Road, Solihull, West Midlands B91 3QJ.
Paragon Bank PLC is a company registered in England and Wales, company number 05390593, and is the banking subsidiary of LSE-listed Paragon Banking Group PLC (ticker PAG).
Paragon's group is organised into two segments, Mortgage Lending and Commercial Lending; Commercial Lending comprises development finance, SME lending, structured lending and motor finance, focused on SME and mid-sized corporate customers.
Paragon's structured-lending desk provides secured revolving credit facilities from None£5m to £35m, typically for up to three years, to UK non-bank lending businesses, secured on the underlying customer receivables across property, point-of-sale, asset finance and SME lending.
In November 2025 Paragon Development Finance increased its maximum loan size to 60m, supporting larger residential development projects for SME developers across the UK.
Paragon offers SME asset finance via hire purchase, finance lease, sale-and-leaseback, operating lease, refinance and unsecured loans, across construction, transport, agriculture, manufacturing, aviation and renewable energy sectors.
Paragon reported its SME Lending division loan book reached 817.5m for the 12 months ending September 2024, with new lending of 480.7m, reflecting growth in asset-based and government-backed lending.
Sources: paragonbank.co.uk
This profile is a curated reference note drawn from public sources, not financial advice or a recommendation. Appetite and terms change; a lender's fit for a given credit is established by approaching it, not inferred from a page.