Boost To Finserv Competition Fails To Ease UK SMB Access To Finance

New research from merchant banking group Close Brothers suggests U.K. small- and medium-sized businesses (SMBs) are still largely struggling to access financing, despite a recent influx of competition in the banking and finance space.

Reports in The Independent on Wednesday (Dec. 14) said Close Brothers research found more than half of SMBs say they are struggling to access the financing they need, with only about 40 percent reporting they have been able to secure financing from the lender they chose.

About one-third that found financing said that it wasn’t enough to fully support their investment plans, however, and approximately one-quarter noted the financing they can access is too expensive.

Following the financial crisis, large traditional lenders largely pulled away from small business financing in response to stricter risk and capital regulations. In response, the U.K. market has seen an influx of challenger banks and FinTechs that aim to fill in the SMB financing gaps. But, according to Close Brothers’ data, that boost of competition seems to have been unable to meet small businesses’ needs so far.

“Low productivity hinders economic growth and improving productivity is vital, particularly as the U.K. prepares to leave the EU,” said Close Brothers banking division managing director Adrian Sainsbury. “Given their importance to the economy, [SMBs] will be central to potential productivity gains. [SMBs] need access to the right finance and support to invest in training staff or adopting new technologies so increasing awareness of financial options is crucial. Bespoke funding solutions which align to specific needs and growth plans are always preferable to a one-size-fits-all approach.”

Close Brothers’ survey, which included 1,500 small businesses in the U.K., France and Germany, also found that German small businesses are better off than U.K. SMBs in their search for financing; French small businesses, however, had a harder time finding financing than U.K. ones.