Open letter calls on UK government to boost SME credit access
A group of UK lenders have written an open letter to the UK Secretary of State for Business, Energy and Industrial Strategy, Grant Shapps, calling on the government to boost small business credit access via improved data sharing.
Lenders implore UK government to improve SME credit access
The letter has been co-signed by Codat, Atom Bank, Funding Circle, Iwoca, Allica Bank, SPRK Capital, Recognise Bank, Plaid, Playter, OakNorth, Wiserfunding and TrueLayer. It has also received backing from the Federation of Small Businesses (FSB).
The letter calls on the government to pass the Data Protection and Digital Information Bill, ensuring that the legislation applies to data needed for SME underwriting. It also calls on the government to “move swiftly” to consult with the industry on how technology can be implemented to improve SME’s access to credit.
It suggests the implementation of an “SME Funding Passport”, a digital file containing “consented standardised and easily shareable” company financial data necessary for underwriting.
“Sharing data instantly with multiple financial services providers would ensure quicker applications for the SME, with a higher likelihood of success,” the letter reads. “It would also decrease application processing times, helping lenders offer more competitive rates and service more loans.”
Martin McTague, national chair of the FSB, says its research indicates that small firms’ appetite for external finance is “reducing”, while the number of those accepted for finance is “falling”, and the interest rates offered to those who do succeed are “rising fast”.
“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,” McTague adds.
“Anything which promotes competition and a greater range of options in the finance market is especially critical, and especially welcome, right now.”
