What changing loan regulations mean for SME eligibility

13/01/2025 by

Frank

Access into finance for small and medium-sized companies, despite making up 99% of businesses as reported by the European Union, in the past has proved difficult. Due to high risk and transaction costs lending to small-to-medium-sized enterprises (SMEs) entails, severe constraints have been felt.

Updated regulations

In May 2024, the House of Commons Treasury Committee filed a report highlighting the fallen confidence in SME funding and lowered acceptance rate to finance. This was partnered with highlighting malpractice from banks and a warning of limiting growth and innovation.

However, last month in December 2024, the government responded to the report. Firstly, it acknowledged the importance and abundance of SMEs with the UK’s economy. In line with the “Government’s Growth Mission”, it continued to set out some policies in order to help small business grow, particularly through investment. Some of these updates include:

1. Continuing to fund 41 “Growth Hubs” across England which offer free and impartial advice.

2. “Help to Grow” helping small business leaders with 5-249 employees.

3. Introduction of a digital adoption Taskforce

4. Delayed implementation of Basel 3.1 with proposed updates to ensure overall capital and infrastructure lending requirements do not rise.

Improving loan eligibility

In light of these changes, SMEs can take some simple steps to improve loan eligibility. These include keeping financial records clean by keeping books up-to-date, strengthening creditworthiness by paying existing debts and keeping up-to-date on payments and highlighting growth potential by creating a clear plan to pitch your business’s future

At AJL Finance, unlike others in the industry, we aren’t secretive about processes so that, as the UK economy evolves, SMEs can fully understand loan terms and fees.

What changing loan regulations mean for SME eligibility