The Department for Business and Trade has opened a call for evidence into small business access to credit.
This call for evidence seeks views, evidence and experiences of applying for and accessing debt finance in the UK.
The review will cover all aspects of the lending market, demand for finance, the application and approval process, alternative models of finance, and under-served customers.
The government is seeking industry views and evidence to assess how far its existing policies meet the needs of business and the lending sector in overcoming barriers to finance and understand where it may be able to go further to create growth through support for small businesses and the lending sector.
The Department says it "need[s] the input of market participants to shape our understanding of the evidence on the main barriers to accessing debt finance" and is seeking views from small businesses, bank and non-bank lenders, and industry experts.
Neil Rudge, chief banking officer for Commercial at Shawbrook, commented: "SME lending in the UK has long been constrained by a one-size-fits-all approach from large lenders, leaving many viable businesses underserved. The reality is that SME finance is far more complex than consumer lending and you need to invest in and really understand this to offer suitable lending products to these vital businesses.
"Since 2008, businesses have become accustomed to cheap debt, but the rise in base rate over the past three years that landscape is shifting. The cost of servicing borrowing has risen, and SMEs are feeling the squeeze from all sides. There is an opportunity to broaden the understanding of where businesses can turn for finance. Specialist lenders, with their broader range of products and more flexible, relationship-driven approach, should be seen as the first port of call for many businesses—not just for those that fall outside traditional lending criteria, but for any business that needs tailored financial solutions.
"SME finance isn’t just about term loans; there’s a full suite of options—asset-based finance, event-led finance, revolving credit facilities, secured and unsecured loans —that can be structured to meet the specific needs of a business, providing flexibility and long-term stability. Many SMEs are prepared to pay more for the right financial solution, knowing they’ll receive expert structuring and ongoing support from seasoned professionals who understand their challenges and ambitions - which often will optimise the cost of borrowing.
"While lenders can innovate and collaborate, the real opportunity for change lies at the macro level. It is incumbent on the government to raise awareness of specialist lenders as the first point of call for SMEs, helping to create an environment where businesses can access the right finance at the right time. Additionally, government can help by taking action to stimulate growth, reduce cost burdens on SMEs, and ensure that funding and capital regimes for specialist lenders are structured to support rather than restrict lending growth. Without intervention, the funding gap for SMEs will persist—hindering innovation, investment, and economic recovery."
