Government pledges to improve access to debt finance for SMEs and start-ups

A small business in need of funding might approach friends and family for financial support. If they are unable to assist, the business owner may seek funding from its existing bank.

Unless a borrower can provide security over some tangible assets (like a property) or a guarantor with assets gives a guarantee in relation to the loan, many banks may be reluctant to or unable to help.

However, outside of these traditional routes, a range of options including challenger banks, commercial finance brokers or online lending platforms may provide more suitable or competitive finance options.

Pros and cons of brokers

One way for a business to seek finance is to use commercial finance brokers or advisors who can help navigate the diverse and complex funding market. While small and start-up businesses may be reluctant to use brokers who charge a fee for their services, regulatory bodies have observed that funding applications submitted via business advisers or qualified brokers tend to be more successful. These professionals can help businesses explore a wider range of options and their sector-specific expertise streamlines the search for suitable finance.

Evidence of barriers to access finance

In March 2025, the Department for Business and Trade called for evidence in respect to the access to debt finance for small businesses. Feedback was received from small businesses, business representative organisations, trade bodies, banks, non-bank lenders, business support providers and local government.

It identified significant barriers to accessing external finance for small businesses included lack of awareness of the available options and difficulties navigating a complex market, particularly for early stage and micro-businesses.

Government proposals to improve funding access

As the result, the Government is proposing a number of measures in an effort to reduce these barriers, as follows:

• Provision of tailored advice via:
  • The national Business Support Service - a website where applications can be made for a government-backed start-up loan of up to £25,000; and
  • Local Growth Hubs – a Government funded programme offering local support, including grant funding and advice.
• Upgrading of the British Business Bank’s information service which provides information on finance options, such as:
  • equity investments;
  • start-up loans of up to £25,000;
  • the Bank Referral Scheme in relation to loans of any sizes and for various purposes to assist business development; and
  • the Community Funding Programme; and loans for FinTech companies and others.
• Working with the Department for Education to promote best practice in enterprise and entrepreneurial education in schools, colleges and universities.

The Government confirmed that it intends to further support the flow of finance to small businesses by implementing several measures, including:

• Raising the total financial capacity of the British Business Bank to £25.6 billion;
• Extending the eligibility criteria to businesses that have no (or a very short) trading history, to ensure businesses which have not built a track record can access low-interest rate finance;
• Extending the Government guarantees in relation to loans under the Growth Guarantee Scheme to encourage lenders to help more businesses access the finance they need to grow and invest;  and
• Supporting Intellectual Property-backed lending.

Furthermore, the Department for Business and Trade’s Business Academy provides businesses with advice through online webinars on topics including digital skills, marketing, exporting and access to finance. A series of webinars focused on Finance for SMEs was launched in September 2025. Topics include the types of finance available to businesses (debt, grants and equity), how to access finance, and getting your business investment ready.

How Hamlins can help

Our Real Estate Finance team acts for borrowers and can assist your business with review and advice on loan and security documents. We ensure all transactions are swift, expertly facilitated and remain on track to a satisfactory conclusion. If you have any questions on any of the issues raised above, please get in touch to find out how we can help.