Our review finds FCA regulation is not a major barrier to SME finance, but highlights frictions we and others can help address.
Read the Feedback Statement (PDF)[2]
Small and medium-sized enterprises (SMEs) – businesses with fewer than 250 employees and an annual turnover under £44m – account for 60% of employment and 51% of turnover in the UK private sector. Their ability to access finance is, therefore, important for economic growth. Yet only 21% of the total value of UK business loans are provided to SMEs and 54% of SMEs are not using external finance in any capacity.
Supporting SME access to finance aligns with our 2025 to 2030 strategy[3], including our commitment to support growth it is a key area of the Government’s growth mission. We therefore asked stakeholders whether our regulation creates significant barriers to SME access to finance and whether there may be opportunities to improve our regulatory framework.
We found no evidence that FCA regulation is a major barrier, though SMEs face demand-side and supply-side challenges, including some smaller regulatory frictions.
We will be focusing our next steps on 3 areas of the FCA’s work, some of which is underway, which could help reduce regulatory frictions and some of the other challenges identified and promote economic growth:
We welcome stakeholders contributing to these different strands of work through engagement opportunities in due course. Where stakeholders identified issues that fall outside our remit, we shared those findings with the relevant bodies best placed to address them.
We launched this work[4] in March 2026 to understand how our regulation affects SME access to finance. We focused on business lending of £25,000 or less to sole traders and small partnerships, as this activity falls within our consumer credit regulatory perimeter. Around 60% of SMEs seeking finance in the last 3 years sought less than £25,000, so this perimeter is relevant to a large share of lower-value SME finance.
We collected feedback through a number of channels – our informal call for input, to which we received 19 written responses; bilateral engagements with trade associations, SME representatives, intermediaries, and government bodies; and a roundtable attended by over 40 organisations.
Our review complements wider government and industry action, including the Treasury's Consumer Credit Act reform, the Bank of England's work on access to finance for high-growth firms, and the British Business Bank's increased financial capacity of £25.6 billion. It also supports our 2025 to 2030 strategy commitment to unlock open finance, alongside our focus on promoting economic growth.
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