Business Secretary Grant Shapps has been asked to improve lending for SMEs in an open letter signed by the FSB (Federation of Small Businesses) and UK fintechs such as Atom Bank and Funding Circle UK.
The letter, seen by UKTN, urges the government to pass the Data Protection and Digital Information Bill and for it to cover SME underwriting data.
It also asks for a consultation with the fintech industry on the possibility of an “SME Funding Passport”, a company file that would hold all its financial data for underwriting.
Martin McTague, national chair, FSB, said: “Small businesses’ access to finance is essential for growth, investment, and innovation, and we’re concerned that our research indicates that small firms’ appetite for external finance is reducing.”
The letter said that SMEs who are currently having issues accessing finance due to it being “not fully optimised” on either side of the transaction.
The letter cited Bank of England figures showing a funding gap of £22bn for SMEs.
Research carried out by Codat, which organised the lending letter, found that 47% of SMEs after a loan are struggling to get one and 55% resulted in taking out a personal loan for their business.
Other signators of the letter include Allica Bank, OakNorth, Playter and Recognise Bank.
McTague added: “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.”