Access to finance Contents


Our inquiry

1.In the aftermath of the 2008 financial crisis, bank lending to small and medium-sized enterprises (SMEs) came “to a standstill”.1 Between 2009 and 2012, new lending to SMEs fell 23%,2 and it took till late November 2015 for it to return to positive annual growth.3 Smaller businesses in the UK employ over half the total private sector jobs, are dynamic creators of new jobs, and account for almost half of private sector turnover.4 It is in the interests of the UK economy to facilitate new businesses to start, grow and become large successful firms.

2.We wanted to hear from those providing finance and those seeking finance to see if the landscape had improved since 2008, what problems remained, and if the Government was taking appropriate action to ensure new businesses can flourish in the UK.

3.The marketplace has changed since 2008. Although the mainstream banks still dominate business lending—the four largest banks (Lloyds, HSBC, RBS and Barclays) account for 80% of business current accounts5—there have been important developments. The Government set up the British Business Bank (BBB) with the purpose of improving the market for SME finance. New banks have entered the market, some aimed specifically at business customers, and the UK has become one of the foremost countries for alternative finance. Both have introduced competition and innovation, particularly in embracing the possibilities of providing services online. We wanted to see what impact these developments were having on new start-ups and growing businesses, and if the industry felt the government was supporting and regulating it appropriately. We are grateful to all those who provided information and answered our questions. We wish to thank the National Audit Office and NESTA for providing guidance at the outset of our inquiry.

4.It is important to note that most of the evidence was gathered for this inquiry before 23 June 2016. Since our final oral evidence session, the Minister with responsibility for small businesses, and the Secretary of State for Business, Innovation and Skills, have changed. Indeed, the new Secretary of State is for a Department for Business, Energy and Industrial Strategy. We acknowledge that the decision taken on the 23 June 2016 to leave the EU is likely to have repercussions for access to finance. We intend to monitor the data on access to finance, and the Government’s response to any repercussions in light of the decision to leave the EU. If there are indications that the situation on access to finance has changed, then we will return to this subject.


3 Department for Business, Innovation and Skills ATF054

5 Department for Business, Innovation and Skills ATF054, CMA Retail banking market investigation: Provisional findings report, 22 October 2015

28 October 2016