Open letter calls on Grant Shapps to boost SME credit access through improved data sharing

Codat – the universal API for small business data – and a group of lenders have written an open letter to the Secretary of State for Business, Energy and Industrial Strategy, Grant Shapps, calling on the government to introduce improved initiatives for sharing of data must support to face the problems faced. by SMEs in accessing credit.

The letter was co-signed by Atom Bank, Funding Circle, iwoca, Allica Bank, SPRK Capital, Recognize Bank, Plaid, Playter, OakNorth, Wiserfunding and TrueLayer. It also received support from the Federation of Small Businesses (SFB).

The difficulty in accessing funding is one of the biggest obstacles to SME growth. The problem exists because the SME lending landscape is not set up for businesses or borrowers to succeed. It is too difficult for lenders to access accurate, up-to-date data to make informed decisions and loan applications are too complex and time-consuming for SMEs.

Stimulating growth in the SME sector – which contributes 50 per cent of GDP and 60 per cent of employment in the UK – is key to ending the ongoing recession. Improved data sharing between the financial instruments used by SMEs and lenders is key to solving the problem, as outlined in the ‘Closing the small business finance gap’ research report.

The technology needed to improve data flow and accessibility between the financial instruments used by SMEs and lenders already exists. Legislative support from the government to progress with Open Bankingsupport lenders and small businesses is long overdue.

The letter calls on the government to pass the Data Protection and Digital Information Bill, to ensure that the legislation applies to data required for SME underwriting. And to move quickly to consult with the industry on how technology can be implemented to improve SME access to credit.

Pete Lord, Codat CEO, says “We in the industry are poised to drive the implementation of this progressive technology and legislative support from government can play an important role in ensuring its success.”

Martin McTague, national chairman of the FSB, says: “Small businesses’ access to finance is essential for growth, investment and innovation, and we are concerned that our research indicates that small businesses’ appetite for external finance is diminishing. At the same time, the number of those accepted for finance is falling, while the interest rates offered to those who do pass are rising rapidly.

“We will need to explore new ideas to change this, such as the Lending Passport, which has the potential to help small firms in their search for finance by simplifying the application process, saving them time and duplicate effort. Anything that promotes competition and a greater variety of options in the financial market is especially critical, and especially welcome, right now.”

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