Easy money or tough old slog? Why government must tackle SME access to finance

Business loans are the topic in the latest Focus on Finance column with Complete Commercial Finance, this time written by Michael Moore…A House of Lords debate on small business access to finance is a timely reminder of the challenges many companies face in securing funding, writes Complete Commercial Finance’s Michael MooreIn my work as a commercial finance broker, one of the things I hear most often from the companies we work with is how frustrating they have previously found the experience of trying to navigate and apply for a business loan.

The relief they find in being able to call and immediately speak to ‘a real human being’ who can give them straightforward advice, meet face-to-face and get things organised quickly, efficiently and effectively is palpable. We’ve all had the experience of pressing endless call options, being directed online to talk to a web bot and unable to actually explain our circumstances, often giving up in exasperation.With High Street banks closing branches in Fakenham and Aylsham this month, the chances of being able to talk to a local business branch manager are increasingly slim and, as tech automation continues to transform the finance sector, the ability to tap into funding has become a real minefield.It’s heartening then to see that the government is concerned and beginning to address how reduced SME access to finance and banking services is impacting UK business. At the end of April, Lord Sharkey briefed the House of Lords on some of the issues this causes, including a lack of awareness of funding sources and high credit costs. He asked His Majesty’s Government what steps they are taking to improve the situation. Several studies show how deeply entrenched the challenge of finding finance has become, with a 2022 Federation of Small Businesses report claiming that the success rate of applications for finance had fallen to an all-time low of just two-fifths, citing lengthy application processes and “the inability to speak to anyone about the process” as a chief concern.More recently, a 2024 Bank of England survey of 2,885 SMEs found that half of respondents had only used internal funds for investment, reporting “a general theme of aversion to external finance”. In fact, 70 per cent of those surveyed stated that they prefer “slower growth to having debt”, with costly credit cards employed most often by those who do opt to use external finance. Last May, a House of Commons Treasury Committee report into SME finance also raised concerns about “increased de-banking” of SMEs, with 140,000 companies having had their accounts closed in 2023, and the high cost of collateral requirements for business loans. In response, the government has conceded that there is definite room for improvement and has launched a call for evidence to understand how it can support SMEs better in overcoming barriers to finance.As a company which helps so many businesses to tap into the right type of specialist finance to boost productivity and growth, we are obviously keenly waving the flag for change to improve access to funding. SMEs are the lifeblood of the economy, creating employment and boosting GDP, and it’s encouraging to see debate at this level which will hopefully lead to greater success for companies in our region.Visit ccf.finance or call 01553 611619 to speak to Michael Moore and arrange a free business finance review.