Fintech lenders call on government to boost SME access to finance
The Federation of Small Businesses and a group of fintech lenders including Funding Circle have urged the government to improve small businesses’ access to funding, to protect the UK’s economic growth prospects.
In a letter to Business Secretary Grant Shapps, seen by a number of publications, the business group and lenders said that more needs to be done to close the £22bn funding gap for smaller businesses, citing Bank of England data.
“There are often too many barriers in place to lenders accessing up to date, accurate data on businesses to make informed decisions, and the application process for small- and medium-sized enterprises (SMEs) can be too complex and time-consuming,” the letter said.
Read more: SMEs seeking funding to drive growth
“To tackle the harmful gap between the critical funding SMEs need and the funding they receive, we are calling for the UK to build on the success of Open Banking and support the country’s small businesses through improved data sharing initiatives.”
The letter’s signatories – who also included Allica Bank, OakNorth, Playter and Recognise Bank – called for the creation of an SME funding passport, containing the standardised financial data needed for underwriting loans, to help small businesses borrow more easily.
Martin McTague, national chair of the FSB, said improving small firms’ access to finance was “essential for growth, investment and innovation.”
Read more: UK Finance predicts slowdown in SME lending
“We’re going to need to explore new ideas to change this around, such as the lending passport, which has the potential to help small firms in their search for funding by simplifying the application process, saving them time and duplicated effort,” he said in a City A.M. report on the letter.
“Anything which promotes competition and a greater range of options in the finance market is especially critical, and especially welcome, right now.”
A new study by business data company Codat found that just six per cent of firms were satisfied with the current state of the SME credit market, while more than half of business owners said they had to borrow in their own name to fund their business.
