This year, 27% of small and medium-sized businesses (SMBs) have reported a reliance on credit cards to fund their businesses – double the figure from 2023. At the same time, credit card delinquency has peaked at 2.8%. These are not just concerns; they are evidence of a lending system in need of significant updates.
Managing and growing a small or medium-sized business encompasses a range of challenges – now is the time for policymakers and financial services leaders alike to rethink SMB lending. Not only would this benefit the SMB community, but with UK start-ups creating 39% of new jobs, it also stands to benefit the UK economy as a whole.
The end of traditional lending?
In recent years, traditional banks have consistently pulled back from long-term SMB lending. As a result of the subsequent lack of options, small firms are increasingly leaning on short-term, high-cost credit — far from a sustainable financial strategy for a growing business.
Some groups are hit harder by this than others, with Ethnic Minority Businesses (EMBs) and entrepreneurs from other underrepresented backgrounds particularly impacted by a lack of lending options. Research has shown that this is often because these businesses traditionally operate through the use of personal accounts, leading to a lack of business credit history. In turn, this creates added risk when applying for bank loans, with businesses declined credit on these grounds. Without sufficient support from mainstream lenders, they are left to navigate a patchwork of financial solutions that often do not match their unique needs or potential.
Strong, viable businesses can find it difficult to access the capital they need to grow, hire or export and in the long run, this could stifle economic dynamism across the UK.
A critical inflection point
The UK Government has acknowledged the scale of the issue, and the call for evidence on small business access to finance, is a welcome step towards systemic reform. Coupled with new investment through the British Business Bank and the reconstituted Board of Trade, there is now welcome political momentum behind fixing the funding gap. The next wave of reform must be rooted in an understanding of how small businesses operate today and how financing solutions must evolve to meet them where they are.
Modern solutions for a modern economy
The financial profile of an SMB is ever-changing, and no two are the same. Compare the SMB landscape in 2015 and 2025, and the differences are clear. Now, many SMBs are digital-first. Some are run part-time. Others operate across multiple income streams. The tools we use to evaluate their creditworthiness need to reflect this.
That means rethinking how risk is assessed, moving beyond outdated models and embracing alternative metrics, including real-time performance data, cash flow history and sector-specific benchmarks. The result of this will be lending solutions which truly understand and meet the needs of an SMB’s own unique financial journey.
It also means fostering a diverse lending ecosystem. Alongside traditional banks, we need to support the responsible growth of non-bank lenders, revenue-based financing models, community-based funding and other flexible capital solutions that can scale with a business.
Finance is only part of the puzzle
Access to capital is a foundational barrier, but not the only one. For SMBs to grow, they also need support in navigating export markets, adopting digital tools and tackling late payments. The Government’s Plan for Change is right to view SMB growth as a multi-dimensional challenge. The focus on exports, through a revamped Board of Trade, is especially important. International growth should be within reach for more UK firms, not just a privileged few. This not only primes UK SMBs for success, but can bolster UK economic growth and enhance the country’s global position as a business leader.
A call for collective responsibility
Fixing SMB finance is not the job of the government alone. Nor can it fall solely to lenders. It requires a coordinated effort from policymakers, industry bodies, technology providers, investors and the businesses themselves.
The launch of the Intuit Small Business Growth Council is a timely opportunity to reset and refocus. Rather than top-down policy, the Council brings together entrepreneurs from across the UK to share their insights, experiences, and ideas so that Government strategies are grounded in the real challenges and opportunities SMEs face every day.
We have the opportunity to build a system that supports the full diversity of the UK’s 5.5 million small businesses—urban and rural, new and established, digital and physical. But doing so means acknowledging that what worked yesterday may not work tomorrow.
The question is not whether SMBs can adapt to the financial system. It is whether the financial system can finally adapt to SMBs.
