SME Finance Taskforce publishes action plan to boost lending
The SME Finance Taskforce, a group of leading banks, alternative lenders, credit agencies and fintechs, has developed an action plan to improve access to funding for the UK’s 5.5 million small- and medium-sized enterprises (SMEs).
The seven-point action plan is outlined in the taskforce’s first report, Smart Data: improving SME lending to drive economic growth, which was published today.
The report concludes that increasing access to high-quality data will enable SMEs to expand and receive funding.
The taskforce, which was formed in April, is chaired by the Centre for Finance, Innovation & Technology (CFIT) and supported by an Open Banking Limited secretariat.
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Lending to UK SMEs has fallen by 20 per cent in real terms over the past decade, according to the report. The resulting funding gap is estimated to be more than £22bn.
Among the report’s range of recommendations is enabling greater trust and understanding in using alternative specialist lenders.
It also calls for prioritisation of the digital information and smart data bill, reviewing HM Treasury’s bank referral and commercial credit data sharing schemes, reforming Companies House, and the development of an e-invoicing scheme for the UK.
Among those backing the taskforce are iwoca, Sage, OakNorth, Allica Bank, Experian, HSBC, Lloyds Banking Group, Mastercard, the Federation of Small Businesses and Revolut, all of which have pledged to work in partnership with the government to grow the economy and contribute to policy and legislative development.
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“The financial services and fintech industry has worked together to design a comprehensive programme that will energise the UK economy by making the lending experience better for both SMEs and the lenders themselves,” said CFIT chair Charlotte Crosswell OBE.
“What’s particularly exciting is that this doesn’t require significant public spending. While policy implementation inevitably takes time, there are so many levers that industry can pull with the support of policymakers, to quickly build momentum, boost SME lending and unlock growth.”
The taskforce’s recommendations build on the blueprint report published earlier this year by CFIT’s inaugural coalition on open finance. That industry-wide coalition had demonstrated that open finance could deliver more lending to SMEs, with a pilot analysis showing that over a quarter of SMEs who risked missing out on credit could get access to finance with enhanced data-sharing.
Chief executive and co-founder of iwoca Christoph Rieche said: “The new government has a great opportunity to collaborate with tech-first lenders so that more SMEs benefit from financing and thus stimulate economic growth – a win-win for all. Access to high-quality data is essential for this to happen, such as through direct access to company VAT data and mandating standardised data formats in Open Banking, which will unlock additional finance for millions of SMEs.”
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