A CROSS-PARTY committee of UK MPs is to examine the key challenges SMEs face when seeking finance.
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The MPs will investigate accessibility, the role of the Bank of England’s Term Funding Scheme, credit reference agencies, and Government state aid.
They 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.
Two in five SMEs say they have had to stop or pause an area of their business because of a lack of finance over recent years, according to research commissioned by Manx Financial Group PLC (AIM:MFX).
The most popular external finance options for SMEs were unsecured and short-term business loans followed by secured and cash advanced loans, the study found. It also showed that 15 percent of SMEs that needed external finance and/or capital were unable to access it.
The MPs are also set to consider the role the government can play, the impact of Covid schemes, and the role of the British Business Bank.
Harriett Baldwin MP, chair of the Treasury Committee, said a key focus would be whether SMEs were able to access the finance they need, and whether there was adequate regulation of the sector. “We look forward to receiving written evidence on this important topic and taking oral evidence later in the year.”
The issue should be a top priority, says tech expert Josh Boer of VeUP. “Our entrepreneurs and innovators shouldn’t have to beg to be supported,” he said.
Steven Mooney, CEO of FundMyPitch, said the lack of access to funding warranted a parliamentary inquiry. SMEs weren’t taken seriously enough by investors and banks, he said.
Fintech entrepreneur Khalid Talukder, co-founder of DKK Partners said the chronic underfunding of SMEs would have “severe economic consequences”.
“Key to this effort should be encouraging international trade and giving (SMEs) access to the latest payments technology to allow them to operate in dynamic emerging markets.”
Publicly traded companies in this story:
| Manx Financial Group | MFX 17.75 +0.25 +1.43% |
