SME finance: ‘Independent lenders have plugged the gap left by traditional banks for years’

GlobalData

Thu, May 15, 2025, 5:03 AM 3 min read

Rachel Reeves has held conversations with the accepted precocious thoroughfare banks astir lending to SMEs and however their existent criteria is hampering their growth. This is encouraging to spot aft what seems similar years of SMEs being often turned down by their banks for finance.

Loan occurrence rates person deteriorated implicit the years, falling to a 50% occurrence complaint compared to a pre-pandemic support complaint of 67% successful 2018, according to a study from the Department for Business and Trade.

This is undoubtedly owed to risk; SMEs whitethorn person defaulted connected the repayment of Covid betterment loans, making them a riskier imaginable for credit. The strict lending criteria could truthful beryllium justified, but consequently, it has besides held backmost captious concern and yet impacted concern and economical growth.

On the different broadside of this communicative is the autarkic lender, which has remained a changeless beingness for SMEs against a backdrop of banking caution. We don’t request a pat connected the backmost for this, but we bash request the SME proprietor to cognize that banks are not their lone option.

Understanding SME entree to concern is thing we person invested successful implicit the past 5 years, and successful a caller survey we asked 500 SME owners if they had been turned distant by their slope and if so, if they had looked elsewhere for finance. Six successful 10 of those surveyed said they would take their main slope for commercialized finance. If banks are truthful acting much cautiously, that leaves a 60% bulk of SMEs susceptible to declined finance. Our survey did spell further and recovered 35% of each respondents had been turned down by their bank. So that gives immoderate consciousness of standard to the caution Rachel Reeves is trying to combat.

In presumption of entree to different options, lone 27% of our survey respondents looked elsewhere erstwhile they were turned down, and we person taken that arsenic a wide motion we person immoderate consciousness to physique arsenic lenders. Our volition has ever been to beryllium accessible; arsenic an autarkic funder we person supported a wide scope of businesses, ample and tiny and crossed galore industries, and we instrumentality our relation successful helping SMEs thrive - and successful immoderate instances, past - precise seriously.

Our relation arsenic an SME lender implicit the years has taught america that SMEs request much consciousness of the backing solutions disposable to them. They request a lender that makes the assorted offerings and options casual to understand, and they besides request entree to advisors and intermediaries successful helping them to apply.

Opening up mainstream lending to much SMEs is simply a indispensable purpose for the Chancellor, and Government underwriting whitethorn mean we spot a higher occurrence complaint for SME backing going forward. There is simply a bigger picture, however. Not lone has autarkic lending been much accessible than ever before, but we’ve besides enhanced our concern solutions truthful they are much suited to what SMEs request close now.