On the 26th March the Small Business, Enterprise and Employment Act became law. The core of this Act deals with finance for SMEs and start-ups, which has been well overdue. Currently, SMEs are predominantly at the mercy of banks and consequently struggle to secure funding. Under the new legislation, RBS, Barclays, Lloyds Banking Group, HSBC, Santander, Clydesdale Bank, Yorkshire Bank, Bank of Ireland, Allied Irish Bank and Danske Ban are all required to pass on the details of any SME whose loan application they deny. These details, with the SME’s permission, are then passed on to an online financial platform to see if funding can be secured by an alternative provider.
The legislation is incredibly valuable to SMEs as it allows alternative providers to access small business credit data. With improved transparency, SMEs are given the option of seeking a loan from a lender other than their bank. This has previously been possible, but with a lack of awareness funding by alternative methods has been difficult to secure, this new ACT will help to bridge this gap. Business Secretary Vince Cable said, “Small businesses provide jobs for millions of people across the country and are driving the economic recovery. The Small Business Act will create the right environment for small businesses to continue to thrive by giving them greater access to finance to help them innovate and grow, and make it easier for them to export goods and services made in Britain.” With this new act more support than ever before is now available for SMEs, meaning that there has never been a better time to start your own business. If you are considering starting your own business, visit our ‘Start-Up Businesses’ page and ensure you get off on the right foot.
For further information on how this Act can help you visit Gov.uk