The UK government has launched a call for evidence to assess how small and medium-sized enterprises (SMEs) access debt finance and identify potential barriers in the lending market. The initiative aims to ensure that businesses across the UK have the financial tools they need to grow and contribute to economic expansion.

With the government’s industrial strategy set for publication in June and a dedicated small business strategy due in 2025, policymakers are focused on enhancing financial support mechanisms for the UK’s 5.5 million small businesses. As part of this effort, officials are seeking input from SMEs, lenders, and industry experts to refine policies that impact access to debt finance.

The call for evidence will run for 8 weeks, closing on 8 May 2025.

Understanding barriers to finance

While progress has been made in diversifying financial markets and improving access to funding, small businesses and finance providers continue to highlight challenges in the lending process. The government’s consultation will explore several key issues, including:

• The extent to which existing policies address business needs and lending sector concerns
• Additional steps that could be taken to enhance SME access to finance
• Barriers preventing businesses from applying for or obtaining debt finance
• The reasons behind the relatively low demand for borrowing among UK SMEs compared to international counterparts

Scope of the call for evidence

The consultation covers multiple aspects of SME finance, including:

• The structure of the lending market
• The demand for business loans
• The application and approval process
• Alternative financing models
• Challenges faced by underserved business segments

Ethnicity and finance

Emma Lovell, CEO of the Lending Standards Board (LSB) said: “SMEs are the backbone of the UK economy, and it’s vital these businesses have reliable access to the finance they need to grow and thrive. But it’s important there’s a balance between the ability to access finance quickly and being able to do so safely. The LSB’s Standards of Lending Practice for business customers – the only independent lending protections for many UK SMEs – have a key role to play here and help support innovation and growth within the financial services sector while mitigating risks SMEs might otherwise face.”