MPs launch inquiry into challenges faced by small businesses in accessing funding

A cross-party committee of MPs has launched a new inquiry into the challenges entrepreneurs face when looking for business finance and what can be done to improve access.

The influential Treasury Committee will examine several issues including the availability of finance for companies of different sizes, the role of government funding schemes and financial innovation in business lending.

It will also look at whether small businesses have adequate access to a complaints procedure for disputes with banks or lenders, and whether business lending should be regulated.

Harriett Baldwin MP, chair of the Treasury Committee, said:

"Small businesses are the lifeblood of local communities, powering economic growth and fostering innovation and an entrepreneurial spirit.

"As a committee, we'll be examining whether small businesses are able to access the finance they need to grow and develop, whether there is adequate regulation of the sector, and if government can take a more active role to support business growth.

"We look forward to receiving written evidence on this important topic and taking oral evidence later in the year."

The inquiry comes as businesses face challenges accessing finance due to record high interest rates as the Bank of England looks to deal with inflation and rising costs for businesses and consumers.

There are also regional disparities in the availability of finance, particularly for those businesses outside of London and the South East, while ethnic minority and female founders face particular challenges in getting the business funding they require.


You can submit evidence to the Treasury Committee's inquiry here. The deadline is 5pm on Sunday 13 August.

If you have feedback you'd like to share with Enterprise Nation which we can share with the inquiry, email Dan at content@enterprisenation.com

The questions being discussed by the inquiry are:

Industry issues 

• What are the key challenges small and medium-sized enterprises face when seeking finance? 

• Through which channels do SMEs find the most success when seeking funding and why? 

• What role can financial innovation play in SME finance? Is there more the government and the regulators can do to improve access to finance through innovative firms? 

• How accessible is finance for SMEs of different sizes? 

• Is finance available to allow SMEs to scale up from venture capital funding? 

• How successful has the Bank of England’s Term Funding Scheme with additional incentives for SMEs (TFSME) been at encouraging banks to lend to SMEs? 

• What role do credit reference agencies play in supporting SME finance?  

• What impact has the RBS bailout state aid Alternative Remedies Package and its various funds for SMEs (implemented by Banking Competition Remedies Ltd) had on SME access to finance? 

• Is securing access to SME finance particularly challenging for women, people from ethnic minorities, people from certain social classes, or any other group? Is so, what should be done about it? 

Regulatory issues 

• Do SMEs have adequate and appropriate access to a complaints procedure when in dispute with their bank or lender?  

• How effective has the Lending Standards Board’s Standards of Lending Practice been?  

• How well does the Financial Ombudsman Service (FOS) work for small business complaints?  

• Is the FOS's existing role in SME finance appropriate? If not, how should it change? 

• How effective has the Business Banking Resolution Service been, and what lessons can be learnt from it?  

• Should SMEs have the same level of consumer protection and deposit insurance limits as retail consumers? 

• Should commercial lending to SMEs be brought into the regulatory perimeter? 

• What impact will the PRA’s proposed Basel 3.1 capital requirements framework, and in particular the proposed removal of the SME support factor, have on SMEs in the context of the PRA’s objectives? 

Government policy issues 

• Should the government do more to enhance SME access to finance? And, if so, what? 

• What has the impact of the Covid Bounce Back Loan Scheme (BBLS) which was followed by the Recovery Loan Scheme, been on SME finance? 

• In the US the Treasury approved a fund, (State Small Business Credit Initiative (SSBCI)) for incentivising and supporting underserved businesses. Does the UK need similar provisions?  

• How useful is the British Business Bank? Does its finance hub improve SME access to finance?