Access to SME finance is crucial for small businesses, it can determine their success or failure. However, many companies face challenges when seeking investment. This article explores four key strategies proposed by the Institute of Chartered Accountants in England and Wales (ICAEW) to enhance access to SME finance. By addressing issues such as limited awareness, government support, new technology, and invoice financing, small businesses can improve their chances of securing the funding they need to thrive.

1. How can raising awareness of SME finance benefit small businesses?

Limited awareness and a lack of advice pose significant obstacles for SMEs seeking finance. Many business owners are unaware of the various funding options available to them. Initiatives like ICAEW’s Business Finance Guide aim to raise awareness and provide guidance on different forms of finance and government support. However, the closure of bank branches has reduced access to in-person advice and support during the application process. Banks and industry organisations must collaborate to drive awareness and educate founders about different avenues for SME finance.

2. What role does government support play in improving access to SME finance?

Government initiatives, such as tax credits or enterprise zones, can assist SMEs in achieving short-term growth, making banks more willing to provide long-term support. However, banks operate as commercial organisations and assess the risk associated with lending to SMEs. Increased costs mandated by the government, such as interest payments, may force banks to pass on these expenses to customers or accept reduced profit margins. Macroeconomic factors, such as changing business cycles and increased bank rates, have also contributed to higher interest rates for SMEs. While finance acceptance rates may be reasonable, the associated costs have become more burdensome. Government support should aim to strike a balance between stimulating SME growth and avoiding undue financial strain on banks.

3. How can new technology bridge the funding gap for small businesses?

Open banking technology provides an opportunity for non-bank lenders to evaluate creditworthiness based on customers’ data. By implementing an SME Funding Passport that contains standardised and easily shareable data, emerging UK lenders can assess funding applications more efficiently. This shift allows non-traditional lenders to evaluate creditworthiness on an ongoing basis, similar to how traditional banks have historically worked with their existing customers. Open banking presents an opportunity to level the playing field and increase access to finance for SMEs.

4. How does invoice financing cater to the changing needs of SMEs?

Many modern SMEs operate without significant tangible assets, such as offices or fleets of vehicles. This shift in business models requires finance options that can adapt to the changing landscape. Invoice factoring with discounting allows finance providers to access real-time trade data and sales invoices to determine safe lending amounts against incoming payments. This approach accelerates cash flow and facilitates faster scaling for contemporary SMEs. By embracing invoice financing, small businesses can overcome the challenge of limited hard assets and secure the necessary funds for growth.


Improving access to SME finance is vital for the success of small businesses. By raising awareness of available funding options, receiving government support, leveraging new technologies like open banking, and exploring invoice financing, SMEs can enhance their chances of securing the financing they need. Collaborative efforts between banks, industry organisations, and government entities are crucial in addressing the challenges faced by small businesses and fostering a more accessible financial landscape for SMEs.

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