We welcome the latest British Business Bank Small Business Finance Markets report. Appropriate provision of small business finance is vital as the UK exits the EU and the economy adapts to the new opportunities and challenges this brings.
Whilst flows of bank lending have remained relatively flat, the report finds there has been significant growth in the volume of finance outside of traditional bank lending products. Whilst we support the entry of new providers and products, in an unregulated market there are very few protections in place for businesses. There are a wide range of different practices amongst lenders, and responsible finance providers are increasingly receiving loan refinancing applications from businesses who have taken out high-cost business loans from exploitative lenders. There is a risk that without regulation, similar trends could occur to those that appeared in the consumer credit market prior to 2014 when the FCA stepped in. This can ultimately have a catastrophic effect on the small business market which is the engine of the UK economy.
We are optimistic about 2020, as small businesses’ confidence is showing signs of recovery from 2019’s economic and political uncertainty. Responsible finance providers are key delivery partners in the British Business Bank’s programmes aimed at boosting the supply of finance into small businesses to level up economic growth and productivity across the regions.