MPs launch inquiry into the financing of SMEs

The Treasury Committee has launched a new inquiry into small business access to finance and small and medium-sized enterprise (SME) lending.

The MPs will investigate the accessibility of finance, the role of financial innovation in business lending, and the role of the Bank of England’s Term Funding Scheme, credit reference agencies and Government state aid in encouraging small business lending.

The Committee will also explore whether SMEs have adequate access to a complaints procedure for disputes with banks or lenders, the effectiveness of the Business Banking Resolution Service, whether business lending should be regulated, the impact of Basel 3.1 reforms on access to finance, and the performance of the Financial Ombudsman Service (FOS) in handling complaints.

The MPs are also set to consider the role the Government can play in enhancing access to small business finance, the impact of covid schemes on businesses, and the role of the British Business Bank.

Harriett Baldwin, 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.”

Steven Mooney, CEO of FundMyPitch, commented: “The lack of access to funding for UK entrepreneurs warrants a parliamentary inquiry and more. SMEs make up the vast majority of businesses in the UK, spreading opportunity, skills, and employment, yet so many of them aren’t taken seriously enough by investors and the big banks.

"In tough economic times with trading costs surging, getting financial backing is make or break for many of these innovative companies. This inquiry needs to explore the mechanisms in place to enable valuations and allow up and coming companies to have a platform to reach the investors they so desperately need to drive growth for the long term.”

Khalid Talukder, co-founder of DKK Partners, added: “The chronic underfunding of SMEs will have severe economic consequences if we fail to act. This inquiry needs to get to the bottom of why accessing credible financial support is such as challenge in the UK compared to other parts of the world.

“Fast-growing companies need finance to hire talent, develop their product offering and compete in the global arena. Key to this effort should be encouraging international trade and giving them access to the latest payments technology to allow them to operate in dynamic emerging markets. Otherwise, will fall behind rapidly as other countries take the initiative hence harming our own economic growth."