Financial health tools could unlock £5 billion in small business lending, claims the Centre for Finance, Innovation and Technology (CFIT).
Editorial
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SMEs account for over 99% of UK businesses, yet many struggle to access finance – driven by fragmented data, limited understanding of their financial health, and inefficiencies in lending processes.
CFIT brought together a coalition – including Lloyds Banking Group, Mastercard, HSBC and FXE Technologies – to investigate how this can be fixed.
The centre has now published a report with a set of practical, scalable recommendations, focused on educating SMEs about their financial data to improve lending readiness, alongside lenders enhancing their guidance and support throughout the application process.
The coalition has highlighted the role of financial health tools, and developed and tested two prototypes designed to improve SME financial visibility and readiness: a Financial Health Checker – a credit-readiness diagnostic tool – and a Small Business Coach – An AI-enabled advisory tool.
CFIT is encouraging lenders to provide access to these kinds of financial health tools before application, during application and after decline. The report’s recommendations also look to Government to support embedding these tools into lending journeys.
Anna Wallace, CEO, CFIT, says: “This report shows that a significant part of the SME lending gap is fixable. Too many viable businesses are being locked out of finance not because capital is unavailable, but because they lack the visibility and guidance needed to be finance ready.”