Government Response to Small Business Access to Finance: What UK Business Owners Need to Know in 2025
Overview: A Landmark Review of SME Finance Access
The UK Government published its response to the Small Business Access to Finance Call for Evidence on 4 December 2025. This comprehensive review shapes the future of business lending in Britain.
The Department for Business and Trade (DBT) and HM Treasury received 96 detailed responses. Respondents included small businesses, banks, non-bank lenders, and commercial finance brokers.
Key finding: Financial education and access to information are significant barriers to business demand for external finance. Many business owners lack awareness of available options and struggle to navigate the complex lending market.
Why UK Small Businesses Struggle to Access Finance
The Knowledge Gap Problem
Most small businesses simply don't know where to find suitable finance. Business representative organisations and lenders both noted that the level of financial literacy among small businesses is low, with a lack of awareness of the available options and difficulties navigating a complex market.
This creates three critical barriers:
Information overload – Finance options exist, but businesses cannot find them easily
Wrong-door syndrome – Many businesses unknowingly approach the wrong type of funder for their needs, leading to wasted time, repeated rejections, and further erosion of confidence in the finance system
Fear of rejection – Previous negative experiences discourage future applications
The Application Challenge
Small businesses report that loan applications feel challenging and lengthy. Opaque loan application processes, lack of clarity on assessment criteria, and slow decision-making can result in rejection without clear explanations.
Many rejected applicants never receive feedback. They apply again elsewhere. They face rejection again. The cycle continues.
How Commercial Finance Brokers Help Businesses Navigate to Finance
The Government's Recognition of Broker Value
The Government specifically sought views on commercial finance brokers within this review. Six broker organisations submitted responses.
The evidence reveals a crucial insight: Rather than a lack of financial products or demand, a significant number of respondents suggested the main barriers to accessing finance are logistical and advisory in nature.
Professional intermediaries bridge this gap effectively.
Why Broker-Submitted Applications Succeed More Often
Regulatory bodies observed that funding applications submitted via accountants, business advisers, or qualified brokers tend to be more successful, as these professionals help businesses explore a wider range of options.
Brokers deliver measurable advantages:
Sector expertise – Sector-specific expertise among brokers was valued for its ability to streamline the search for finance www
Market knowledge – Brokers understand which lenders suit which business types
Application quality – Professional preparation reduces rejection rates
Time savings – Businesses avoid the costly trial-and-error approach
The Growing Importance of Finance Intermediaries
The Government acknowledges that broker usage will increase. There was recognition of the increasing role of brokers in helping navigate the diverse and complex market for credit provision for SMEs, and that utilising brokers was likely to become more common as it is in other areas of finance, such as mortgages.
This mirrors the evolution in personal finance. Mortgage brokers became standard. Commercial finance brokers will follow.
How Brokers Support Financial Confidence
The government acknowledges the positive role brokers can play in helping to reframe debt as a strategic tool for sustainable growth rather than a risk to be avoided.
Many business owners fear debt unnecessarily. A skilled broker explains how strategic borrowing creates opportunity—not danger.
The Government's Position on Commercial Finance Brokers
Official Support for the Broker Sector
The Government response includes clear commitments regarding brokers.
Signposting commitment: DBT will seek to signpost to reputable professional bodies such as the National Association of Commercial Finance Brokers where appropriate in our wider business support offer.
Integration proposals: Some finance respondents suggested that embedding advisors and brokers into BGS or other platforms would ensure that support is human as well as outcome-driven.
Addressing Broker Standards
The review acknowledges mixed experiences with brokers. Some small business owners reported encountering high interest rates and difficulty identifying trustworthy, affordable brokers who could secure appropriate finance.
The industry response proposes clear standards: To address these issues, respondents proposed that broker standards could be improved through accreditation, membership in professional bodies like the National Association of Commercial Finance Brokers, and requirements for qualifications, whole-market access, and standardised commission disclosures.
Commission Transparency
The Government heard concerns about commission practices. The Government acknowledges concerns raised by stakeholders in the sector in relation to particular instances of broker conduct, including issues around transparency on commissions and its relationship with high-cost lending. We will engage with the sector to better understand the impact of this issue and seek to support best practice on transparency and broker conduct.
Reputable brokers welcome this scrutiny. Transparency builds trust.
Key Government Initiatives Announced
British Business Bank Expansion
The Government announced significant funding increases:
At the Spending Review, the government announced the British Business Bank's total financial capacity would rise to £25.6 billion, enabling a two-thirds increase in support for UK businesses.
Over the next 5 years, we plan to expand our offer to start-ups and deliver at least 85,000 loans, increasing our annual deployment by a third.
Start-Up Loans Programme Changes
Eligibility criteria will expand significantly. We will also extend eligibility to businesses that are up to 5 years old, to ensure existing businesses that have not built a track record can continue accessing low-interest rate finance.
This matters for newer businesses lacking trading history.
Growth Guarantee Scheme (GGS)
We have put the Growth Guarantee Scheme on a longer-term footing, giving lenders the certainty they need to use the scheme strategically and help more businesses access the finance they need to grow and invest.
The ENABLE Guarantee Scheme capacity increases by £3 billion. This supports banks and non-bank lenders to extend more SME finance.
Business Growth Service Launch
In July 2025, we launched BGS as a nationally recognised brand for business support in the UK, integrated with long-term, locally-led delivery through Growth Hubs in England and a new digital service (Business.gov.uk).
This service signposts finance options, including support provided by commercial finance brokers.
Personal Guarantees: New Protections for Business Owners
The Current Challenge
Personal guarantees (PGs) concern many business owners. Business representative organisations noted that PGs are perceived to be taken as a blanket requirement, regardless of a business's financial health or available security. This practice is also seen as a major deterrent to borrowing.
Women entrepreneurs particularly hesitate. Property ownership requirements exclude younger business owners.
Government Action on Personal Guarantees
A mandatory code of conduct will address these concerns: This will include a mandatory Code of Conduct for GGS accredited lenders to ensure communications about PGs are clear and their use is fair and transparent.
Primary residences are already excluded from GGS loan guarantees.
Finance Options for Underserved Business Owners
Women Entrepreneurs
The review identifies specific barriers. Many women entrepreneurs never seek external finance, instead relying on self-funding. This often reflects cultural factors rather than lack of ambition.
The Government supports the Invest in Women Taskforce and Investing in Women Code.
Ethnic Minority Business Owners
Respondents identified several barriers that ethnic minority-led businesses face when accessing finance. These include communication challenges such as language differences, cultural misunderstandings, a lack of confidence that financial services providers understand their needs.
The Government will continue working with CREME (Centre for Research in Ethnic Minority Entrepreneurship).
Disabled Entrepreneurs
Disabled and neurodiverse entrepreneurs face significant and often systemic barriers to accessing finance and business support. Complex application processes, inaccessible pitch formats, and unclear eligibility criteria frequently exclude these individuals.
The Disability Finance Code for Entrepreneurship will expand its reach.
Community Development Finance Institutions (CDFIs)
CDFIs provide crucial support for underserved groups. There was a strong consensus among respondents from all sectors that CDFIs are essential actors in widening access to finance, particularly for businesses in coastal and industrial communities, women-led and ethnic minority-led businesses, those with limited access to traditional lenders.
The Community ENABLE Funding programme launched in May 2025. It supports up to £150 million of CDFI lending over two years.
What This Means for Your Business: Practical Next Steps
Finding the Right Finance
Assess your needs – Determine how much finance you need and for what purpose
Consider a broker – Professional advice improves success rates significantly
Check broker credentials – Look for NACFB membership and whole-market access
Prepare thoroughly – Strong applications succeed more often
Explore all options – Don't limit yourself to your existing bank
Using Government Resources
Business.gov.uk – The new digital service provides personalised finance guidance
Growth Hubs – 41 hubs across England offer local, tailored support
British Business Bank Finance Hub – Independent information on finance options
Business Academy – Free webinars on accessing different finance types
Working with a Commercial Finance Broker
A qualified broker can:
Match your business needs with appropriate lenders
Prepare applications that meet lender requirements
Navigate complex eligibility criteria
Save time by avoiding unsuitable options
Negotiate better terms through market knowledge
Choose brokers who offer transparent commission disclosure and whole-market access.
Key Facts and Figures
Metric
Detail
Call for Evidence Responses
96 total submissions
British Business Bank Capacity
£25.6 billion
Start-Up Loans Target (5 Years)
85,000 loans
Deployment Increase
Two-thirds increase by 2026-27
ENABLE Guarantee Increase
£3 billion additional capacity
Community ENABLE Funding
Up to £150 million lending support
Growth Hubs in England
41 regional hubs
Conclusion: The Future of Small Business Finance
The Government's response signals a significant shift in SME finance support. Barriers remain, but new initiatives address them directly.
Commercial finance brokers emerge as valuable navigators in this complex landscape. Professional guidance helps businesses find suitable finance faster—and with higher success rates.
The message is clear: strategic borrowing supports growth. Fear of debt often costs businesses more than debt itself.
For UK business owners seeking finance, help is increasingly available. Use it.
