CFIT launches initiative to bridge UK SME lending gap

The Centre for Finance, Innovation and Technology (CFIT), in collaboration with major financial players including Mastercard, Lloyds Banking Group, and HSBC, has officially launched a new Coalition aimed at unlocking access to finance for small and medium-sized enterprises (SMEs) across the UK.

The initiative will focus on closing the UK’s SME credit gap by developing technology-driven solutions that help small businesses better understand and improve their creditworthiness. Leveraging cutting-edge data tools and alternative finance indicators, the Coalition is committed to addressing the root causes of low SME loan application rates, such as lack of awareness, past rejections, and fear of taking on debt.

“Alongside our industry partners, we’re shifting our focus from the supply side of SME to look at how we can boost demand for finance by helping small businesses to better understand their creditworthiness, overcome a fear of finance and apply for the funding they need with confidence,” said Leon Ifayemi, CFIT’s Director of Coalitions and Research.

SMEs account for 99.8% of UK businesses, yet many are held back by a financial system that often overlooks their needs. The British Business Bank recently found that 60% of SMEs who avoid seeking finance are unaware of their options, while 72% of previously rejected applicants are discouraged from reapplying. This has contributed to a 20% drop in SME lending over the last decade, impacting national economic growth.

Smarter lending through data

The Coalition will explore how alternative data sources, such as cash flow, income, and payment history, can supplement traditional credit information to give lenders a more complete picture of a business’s financial health. This data-driven approach will be powered by technologies like Open Finance and integrated into a user-friendly dashboard to help SMEs better understand what drives lending decisions.

The Coalition also aims to conduct regional analysis to identify areas where SME lending is particularly constrained, especially in economically disadvantaged communities. The insights will inform both real-world financial tools and policy recommendations to the UK government, aligning with Treasury efforts to improve commercial credit data sharing.

Backed by industry leaders

Key voices from across the financial sector have endorsed the Coalition:

Angelene Woodland, Chief Customer Officer at British Business Bank, said: “We believe that access to finance should be clear, simple and accessible We’re pleased to be working with CFIT and industry partners to turn traditional and alternative data into user-friendly tools that will give smaller businesses the confidence to apply for funding.”

Tom Wood, Head of SME Business Bankingat HSBC UK, noted: “One in four SMEs lack essential resources for growth. To ensure long-term growth and economic stability, we need to make financing more transparent and accessible for SMEs, particularly those in underserved areas.”

Elyn Corfield, CEO of Business & Commercial Banking at Lloyds Banking Group, commented: “We want to lend more to more businesses. This is a real opportunity to get more financing into the hands of SMEs by improving their understanding of their own financial data, eligibility for credit and why a loan has been declined so they can reapply in the future.”

Mark Barnett, Global Head of SMEs at Mastercard, said: “Tackling this credit gap requires unleashing smart, data-driven solutions like Open Finance that expand pathways to lending decisioning and unlock creditworthiness. By partnering with CFIT and industry leaders, we’re proud to accelerate the development of insight-driven lending models that provide greater visibility into SMEs’ financial health and drive confidence to invest in their futures.”