Jeremy Lefroy – 2016 Parliamentary Question to the Department for Business, Innovation and Skills

The below Parliamentary question was asked by Jeremy Lefroy on 2016-05-24.

To ask the Secretary of State for Business, Innovation and Skills, what recent steps his Department has taken to increase the level of access to credit for businesses in Stafford constituency in the last 12 months.

Anna Soubry

The Small Business, Enterprise and Employment Act 2015 contained two specific policies to support Small and Medium-sized Enterprises (SMEs) in accessing finance.

The first requires major banks to refer SMEs they reject for finance to designated ‘finance platforms’ that can help match SMEs with alternative finance providers. This will ensure that viable SMEs, including businesses in Stafford, that may not fit the major banks’ risk appetite can still get the finance they need to grow and expand. Three platforms have recently been designated by HM Treasury on the advice of the British Business Bank and are expected to come into operation later this year.

The second requires the major banks to share information on their SME customers, with the SME’s permission, with other lenders through designated Credit Reference Agencies. This will improve the ability of challenger banks and alternative finance providers to conduct accurate risk assessments and level the playing field between providers and make it easier for SMEs to get finance from providers other than their bank.

The Government is supporting the Peer-to-Peer (P2P) and Crowdfunding sectors, which provide alternative sources of finance for both businesses and individuals. The British Business Bank, for example, has invested £100m in SMEs via five P2P platforms.

In addition, the British Business Bank’s Enterprise Finance Guarantee (EFG) scheme has facilitated over £2.6 billion of bank lending and other finance to over 25,000 SMEs. Since the start of the scheme, 45 EFG loans have been drawn down in Stafford worth over £5 million. Government has also provided loans through the Start Up Loans Company to help new businesses in Stafford. 42 start up businesses in Stafford have secured a loan from the Start Up Loans Company, with a total value of over £218, 000.

More widely, credit conditions for business continue to improve with net lending to SMEs in 2015 positive across the complete year, the first time this has happened since the financial crisis.