The UK Government has announced its most significant reforms to small business finance in years, with Chancellor Rachel Reeves pledging to unlock billions in lending for SMEs ahead of her Mansion House speech.

The reforms are designed to close the estimated £1.6 billion to £4.1 billion annual gap between SME demand for finance and the amount currently available, helping businesses across the UK to grow, invest and create jobs.

• Growth Guarantee Scheme expansion – The British Business Bank’s Growth Guarantee Scheme, which provides a 70% government guarantee on commercial loans to SMEs of up to £2 million, will scale up to facilitate an additional £2 billion of SME lending per year by 2028/29 – more than doubling current support from £1.35 billion to £3.35 billion annually.
• 12,000 additional SMEs supported per year – The expanded scheme is estimated to support 20,000 businesses per year by 2028/29, up from 8,000 currently – a 150% increase. Maximum loan terms will also extend from six to ten years for loans of up to £1.1 million.
• £500 million for innovative SMEs – The British Business Bank has allocated £500 million within its ENABLE Guarantee programme to unlock lending for IP-rich SMEs and scale-ups in sectors such as creative industries and life sciences.
• Community finance strengthened – The Community Finance Taskforce, launched in February, has secured a total of £10 million in philanthropic funding from supporters including JPMorganChase, alongside support from BNY. A Roadmap will be published early next year with the aim of unlocking an additional £1 billion of SME lending over the next five years.
• New export finance scheme – A new portfolio guarantee scheme, delivered jointly by UK Export Finance and the British Business Bank, will launch in spring next year to help smaller businesses access lending for export activity and international expansion.
• Open Finance and building society reforms – The government intends to accelerate the development of Open Finance with an initial focus on SME lending, and will remove legislative barriers for building societies wishing to lend to SMEs.

For more information, visit gov.uk.