The Treasury Committee has launched a new inquiry into small business access to finance and small and medium-sized enterprise (SME) lending.

The cross-party Committee of MPs will examine the key challenges SMEs face when seeking finance, the regulation of small business lending, and the role the Government can play in enhancing lending to small businesses.

In the wide-ranging new inquiry, the MPs will investigate the accessibility of finance, the role of financial innovation in business lending, and the role of the Bank of England’s Term Funding Scheme, credit reference agencies and Government state aid in encouraging small business lending.

The Committee will also explore whether SMEs have adequate access to a complaints procedure for disputes with banks or lenders, the effectiveness of the Business Banking Resolution Service, whether business lending should be regulated, the impact of Basel 3.1 reforms on access to finance, and the performance of the Financial Ombudsman Service (FOS) in handling complaints.

The MPs are also set to consider the role the Government can play in enhancing access to small business finance, the impact of covid schemes on businesses, and the role of the British Business Bank.

Commenting on the new inquiry, Harriett Baldwin MP (pictured), Chair of the Treasury Committee, said: “Small businesses are the lifeblood of local communities, powering economic growth and fostering innovation and an entrepreneurial spirit. As a Committee, we’ll be examining whether small businesses are able to access the finance they need to grow and develop, whether there is adequate regulation of the sector, and if Government can take a more active role to support business growth.

“We look forward to receiving written evidence on this important topic and taking oral evidence later in the year.”

The Committee is seeking evidence on the following industry issues:

• What are the key challenges SMEs face when seeking finance?
• Through which channels do SMEs find the most success when seeking funding and why?
• What role can financial innovation play in SME finance? Is there more the government and the regulators can do to improve access to finance through innovative firms?
• How accessible is finance for SMEs of different sizes?
• Is finance available to allow SMEs to scale up from venture capital funding?
• How successful has the Bank of England’s Term Funding Scheme with additional incentives for SMEs (TFSME) been at encouraging banks to lend to SMEs?
• What role do credit reference agencies play in supporting SME finance?
• What impact has the RBS bailout state aid Alternative Remedies Package and its various funds for SMEs (implemented by Banking Competition Remedies Ltd) had on SME access to finance?
• Is securing access to SME finance particularly challenging for women, people from ethnic minorities, people from certain social classes, or any other group? Is so, what should be done about it?

The Committee invites written evidence submissions by 5pm on Sunday 13 August 2023.