Government aims to tackle SME lending barriers

A new paper aimed at improving access to finance for small and medium-sized businesses (SMEs) has been launched by the government.

Titled 'Financing a Private Sector Recovery', the publication includes a number of options that may help smaller firms overcome the challenges currently preventing them from securing funding.

These include increasing the use of equity and encouraging venture capital to invest in a broader spread of businesses, as well as improving bank loan application transparency and boosting competition between banks and other finance institutions.

"If we don't anticipate and tackle finance barriers now, we could face a big problem in the future. Left unchallenged, a lack of accessible finance for businesses could prevent the recovery accelerating," business secretary Vince Cable warned.

Demand for finance could be set to rise in the coming months, as Kathleen Hall of SmallBusiness.co.uk recently argued that it is currently a good time to start a business for entrepreneurs who have identified room in the market for a new product or service.