A cross-party committee of MPs will examine the challenges faced by SMEs seeking financing, amid a national slowdown of startup funding.
The MP inquiry will examine the state of SME regulation and the role the government can play in enhancing financing options for startups.
The investigation will look into accessability of funding, 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 financing.
Another area of investigation will be whether SMEs have adequate access to a complaints procedure for disputes with banks and other lenders.
The committee will be welcoming written evidence submissions as the inquiry goes on.
“Small businesses are the lifeblood of local communities, powering economic growth and fostering innovation and an entrepreneurial spirit,” said Harriett Baldwin MP, chair of the Treasury committee.
“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 inquiry comes at a difficult period for startups seeking financing. Recent data found that UK tech companies experienced the steepest funding decline across Europe in the first half of 2023 as rising interest rates, inflation and geopolitical disruption hold back growth.
Steven Mooney, CEO of the startup funding platform FundMyPitch, said: “The lack of access to funding for UK entrepreneurs warrants a parliamentary inquiry and more.
“SMEs make up the vast majority of businesses in the UK, spreading opportunity, skills, and employment, yet so many of them aren’t taken seriously enough by investors and the big banks.”