// NEWS //
European SMEs at risk as they build AI strategies on shaky digital foundations
Qonto, one of Europe’ s leading business finance management solutions for SMEs and freelancers, has published its comprehensive analysis of Digital Transformation across European small and medium businesses.
The report, created in collaboration with Appinio, surveyed 1,600 senior decision-makers across France, Germany, Italy and Spain in August 2025. As European businesses race to remain competitive in an increasingly digital economy, the study uncovers a striking paradox that could threaten the future of Europe’ s economic backbone: while 46 % of European SMEs have embraced AI tools like ChatGPT, fundamental business systems remain dramatically underadopted, with only 24 % using digital accounting and 22 % implementing videoconferencing such as Zoom.
This reveals nearly half of Europe’ s 25 million SMEs are prioritising experimental AI over crucial digital foundations, potentially leaving them vulnerable as competitors with stronger digital infrastructure gain decisive market advantages.
While 92 % of the European SMEs surveyed acknowledge digitalisation and AI as relevant, only 62 % treat it as‘ absolutely crucial’ – creating a dangerous complacency gap. A third of businesses( 38 %) view Digital Transformation as merely
‘ somewhat important’, representing approximately 9.5 million European SMEs that could be vulnerable to competitive displacement. Spain leads European digital conviction with 69 % rating digitalisation as crucial, while France shows the largest commitment deficit at just 52 % – a 17-point gap that could prove economically costly as digital-first competitors gain market share.
Love Finance secures £ 45 million debt financing to boost SME lending in the UK
Love Finance, a UK SME lender and broker, has secured £ 45 million in its first debt financing arrangement, enabling the company to expand its loan book and support more UK SMEs with fast and flexible business loans. The funding package comprises a £ 35 million Revolving Credit Facility( RCF) from FTSE 250 specialist lender, Paragon Bank, and a £ 10 million junior Medium-Term Note( MTN) programme from LGB Capital Markets.
This milestone allows Love Finance to lend directly from its own book, accelerating decision-making and widening access to essential capital for SMEs.
Founded in 2016, fully bootstrapped and profitable, Love Finance has grown revenue over 900 % in the last four years to £ 9.2 million in 2024 and doubled its team, while providing £ 300 million in funding to more than 7,000 SMEs across the UK.
Each loan will be principally supported through Paragon Bank’ s senior RCF and LGB Capital Markets’ junior MTN programme.
Paragon’ s Structured Lending division, which has a strong record of providing senior secured funding to help UK nonbank lending businesses scale their own loan activities, and LGB, known for delivering innovative financing solutions, underpin Love Finance’ s lending, while the remainder is provided by the company itself, offering flexibility and control in shaping loans to SME needs.
Jamie Pickering, Co-head of Structured Lending at Paragon Bank, said:“ Paragon’ s Structured Lending division is designed to support high-growth businesses with bespoke funding solutions that enable them to scale at pace. Our latest partnership with Love Finance reflects this mission.” �
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