The Centre for Finance, Innovation and Technology (CFIT) announced on January 7 that Mastercard and Lloyds Bank will partner with it to fund a new industry-led coalition aimed at helping the United Kingdom’s 5.6 million small businesses access external finance. The coalition, which will be launched in the first quarter of 2025, seeks to address the challenges small businesses face in securing the financial resources they need to grow and thrive.
The Need for Small Business Finance in the UK
Small businesses form the backbone of the UK economy, yet many are hesitant to seek out loans or external funding due to negative past experiences or cultural factors, including a more risk-averse approach to finance. Jane Prokop, executive vice president and global head of small and medium enterprises at Mastercard, highlighted the issue, noting that while small businesses are often reluctant to borrow, when they do, they often struggle to secure funds at reasonable rates or in the required amounts. This has created a gap in financial access that stifles growth and innovation for many of these businesses.
The new coalition aims to change this by creating solutions that will help businesses navigate these barriers and secure the financing they need to expand. CFIT believes that technology, policy, and regulatory solutions will be critical in addressing these challenges.
Key Initiatives of the Coalition
The CFIT-led coalition will focus on several key projects:
- SMB Digital Finance Education Tool – Aimed at improving small business owners’ understanding of financing options, this tool will educate businesses on how to effectively access and utilize finance.
- Digital Marketplace – This platform will help connect small businesses with potential financiers, increasing transparency and competition in the lending market.
- SMB Resilience Index – This index will provide financial service providers with better insights into the resilience of small businesses, helping them make more informed lending decisions.
These initiatives are designed to enhance small businesses’ confidence in seeking finance and to improve access to funding at affordable terms.
Industry Support and Vision
CFIT, which was launched in 2023 with backing from the HM Treasury and the City of London Corporation, aims to act as an innovation accelerator for financial services. The organization has previously launched coalitions focused on Open Finance and Economic Crime, demonstrating its commitment to addressing systemic challenges in the financial services sector.
According to Elyn Corfield, CEO of Business and Commercial Banking at Lloyds Bank, improving awareness of various financial options is essential to encouraging small businesses to apply for financing. This, in turn, will help them invest in infrastructure, products, and services, enabling them to contribute to UK growth.
Looking Ahead: More Partners to Join the Coalition
CFIT emphasized that additional organizations will be joining the coalition in the coming months, further strengthening its capacity to address small business financial needs. The coalition’s ultimate goal is to ensure that small businesses can access funding quickly and efficiently, empowering them to invest, grow, and drive economic progress across the UK.
In September 2024, CFIT also launched a coalition focused on tackling financial crime, with partners including Amazon Web Services (AWS), Revolut, Santander, and the Financial Conduct Authority (FCA), among others. The two coalitions align with CFIT’s broader mission to improve financial systems and services for both businesses and consumers.
Conclusion
The new CFIT-led coalition, backed by Mastercard, Lloyds Bank, and others, marks a significant step toward improving small business finance in the UK. By addressing key barriers to finance and leveraging technology to provide better access and decision-making tools, this initiative could pave the way for more robust financial health for millions of small businesses. This, in turn, will contribute to the broader goal of fostering growth, innovation, and economic stability across the country.
Related Topics:
Finance Committee Approves Billions in Last-Minute 2024 Budget Transfers
The Financial Imperative of Sustainability: Shaping a Resilient Global Economy
Financial Experts Offer Tips for Smarter Financial Decisions in 2025
