The UK has one of the world’s strongest financial services sectors, yet many SMEs struggle to access the finance they need to start, scale and succeed. The persistent constraint is not simply appetite for lending. It is that too many businesses and lenders do not share the same clear, decision ready view of financial health and funding readiness.
CFIT’s “Improving SME Access to Finance” report frames this as an addressable financial readiness gap estimating that closing this could unlock around £5 billion in additional lending annually and enable approximately 160,000 more businesses to access finance each year.
The challenge shows up in outcomes across the market. Fewer than half of SME loan applications succeed and conversion after referral through the Bank Referral Scheme remains very low, with just 6% ultimately securing credit. Confidence is also weakened, with only 34% of SMEs planning to apply for finance confident their bank will agree, down from 56% in 2019.
This is where the opportunity becomes practical. When businesses have a clearer view of what lenders need and receive actionable guidance on how to improve the parts of their profile that are holding them back, more of them can move from declined to finance ready within a relatively short period as their financial profile matures.
The CFIT report captures the point clearly. As Anna Wallace, CEO of CFIT, put it:
“A significant portion of the SME lending gap is solvable. Too many viable businesses are excluded from finance not due to a lack of capital, but because they lack the visibility and guidance needed to become finance ready.”
FXE’s role: turning insight into action
CFIT established the SME Access to Finance Coalition to develop and test applied, data driven solutions that improve SMEs’ understanding of their financial position and ability to access finance, bringing together participants including Mastercard, Lloyds Banking Group, HSBC UK and FXE Technologies (FXE).
FXE’s contribution focused on a core finding in the report: that a significant proportion of declines reflect identifiable, addressable issues rather than underlying business unviability. FXE’s analysis of approximately 24,000 Bank Referral Scheme referred businesses, showing that nearly two thirds had credit profiles with identifiable, addressable issues.
Through our work, we demonstrated how data driven tooling can:
- Identify remediable issues in SME financial profiles
- Give businesses clear, actionable insight into their funding readiness
- Enable lenders to make more confident decisions earlier
To support this, FXE developed the Funding Health Checker. A mature, operationally ready credit readiness assessment tool, developed through supporting over 500,000 businesses through applications for finance and tracking lending outcomes that can be deployed at the point of application, post decline, or via adviser channels. Through personalised feedback and prioritised steps to improve access to finance, SMEs can build a detailed understanding of what makes them fundable and the actions they can take.
When businesses receive clear, tailored information through Funding Health Checker confidence in applying rose from 53% to 77%, with 98% saying they would take the recommended actions.
Setting the direction for the future
CFIT concludes that improving SME access to finance requires giving businesses a meaningful, personalised understanding of their financial position and readiness for lending, supported by tools that can be deployed at scale.
For FXE, this work reflects a broader commitment to move the industry from decision opacity to decision clarity, supporting more viable SMEs to access finance while strengthening outcomes for lenders through improved confidence and reduced friction.
We are proud to be at the centre of this transformation, working alongside leading institutions to turn insight into measurable impact.
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Authors
Centre for Finance, Innovation and Technology
CEO and Co-Founder - FXE Technologies