Published:
Oct 25, 2025
Author:
Sarah Parsons Wolter
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In an era when everything from groceries to gym memberships can be financed on installment, it was only a matter of time before the logic of “Buy Now, Pay Later” reached the defense industry. NATO’s ambition to push military spending toward 5% of GDP by 2035 has prompted a level of financial creativity that makes consumer credit look quaint. The proposed solution? Europe’s €150b “SAFE” program, a joint borrowing mechanism for defense, that effectively turns deterrence into a deferred payment plan. Security, it turns out, can now be amortized.
Ironically, governments are staring down the same balance sheet limits as the consumers they serve. Decades of post-2008 debt accumulation and pandemic spending have left little fiscal headroom, especially with respect to such a sensitive subject. Traditional banks, hamstrung by ESG screens and risk committees, have quietly withdrawn from the sector; some have even closed accounts simply for being “defense adjacent.”
Yet the geopolitical bill has arrived, and luckily for them, the government is both the player and the referee. The result is a new global asset class: sovereign rearmament financed through shared borrowing, guarantees, and, increasingly, private markets. Names like OakNorth, Funding Circle, Allica, Iwoca, and Liberis, better known for funding dentists and delivery firms, are now being courted to bankroll the next generation of British armaments suppliers.
For small manufacturers, being asked to double production to meet government targets while losing access to finance has created a precarious situation. A British Business Bank program has come to the rescue, guaranteeing up to 70% of loan losses; essentially a taxpayer-backed safety net to encourage fintech companies to underwrite war production. In other words, the Ministry of Defence may soon be sharing credit risk with the same lenders that brought you merchant cash advances and embedded SME credit.
Viewed through a financial-historical lens, it’s hard not to admire the symmetry. Just as Klarna democratized consumption, fintech lenders may be democratizing militarization. Today’s home-baked European rearmament drive is macro-level BNPL in action: buy security today, pay for it tomorrow (preferably said in an Arnold Schwarzenegger accent).
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