Is SME access to finance about to get easier?

Small or Medium-sized Enterprises (SMEs) make up the vast majority of the UK economy, with 5.45 million of Britain’s 5.5 million businesses being considered ‘small’ (1-49 employees)—but external finance is crucial for successfully launching a new business and helping it to reach its growth potential.

However, despite their importance in terms of GDP, tax revenue and employment, SMEs have struggled to acquire external financing in recent years, with small business owners complaining that banks are using restrictions to deny these companies’ applications.

According to a report by the Department for Business and Trade, the average loan success rates for companies applying for bank finance are less than 50%. This is down from an approval rate of 67% in 2018, before the Covid outbreak.

“There will be a number of reasons why small businesses are rejected but there is a question as to whether these rejection rates are too high and why this may be the case,” the report said.

What’s being done to make securing small business finance easier?

The British Business Bank

Established in 2024, the British Business Bank (BBB) offers a range of financial programs and initiatives, with the aim of increasing the supply of funding and reducing regional disparities in finance available for SMEs.

Rather than lending directly to businesses, the BBB works by partnering with a wide range of financial institutions—such as banks, venture capital firms and alternative lenders—to improve access to finance. It does this through a range of initiatives, including loan guarantee schemes, investment funds and programmes designed to support start-ups, scale-ups and innovative businesses. Notable examples include the Start Up Loans programme, which offers personal loans and mentoring to new entrepreneurs, and the Recovery Loan Scheme, created to support businesses following the pandemic.

The BBB also provides market research, guidance and tools to help SMEs understand and navigate their finance options.

Currently, the British Business Bank is covering 70% of the loans banks provide to small businesses, depending on certain criteria, however lobby group UK Finance has argued that the scheme’s funding needs to be backed with more cash before banks will increase the number of loans.

Small Business Strategy to be published later this year

A call for evidence into small business’ access to finance has recently closed, ahead of the publication of the government’s Small Business Strategy later in 2025.

The purpose of this consultation with small businesses, bank and non-bank lenders, and industry experts, was to assess to what extent existing government policies meet the needs of businesses and the lending sector, and understand how the government can create further growth through financial support for SMEs and the lending sector.

We’ll be keeping a close eye on the outcome of the consultation, and what the government’s Small Business Strategy will mean for SMEs in the UK.

Need support with your small business?

Here at Warr & Co we understand the challenges startup and SME business owners face, because we’ve grown from a small business ourselves.

That’s why we deliver a tailored service to each and every client, supporting you with all aspects of your financial planning and accounts. We will also make sure you’re aware of the support and relief available to you, and support you to apply for and access these.

To find out more about how we can help your business secure external financing, or any other aspect of our service, book a free small business consultation now.