FCA Sets Out New Plan to Improve Small Business Access to Finance

Access to finance remains difficult for many small businesses, particularly those looking for relatively modest amounts of funding. The Financial Conduct Authority is now looking at practical ways to reduce some of that friction. 

On 17 September 2026, the FCA published the findings of its review into SME access to finance. Its conclusion was significant. FCA regulation itself does not appear to be a major barrier. Instead, smaller businesses often struggle with complex applications, limited knowledge of available products, repeated checks, and difficulty finding finance that reflects how modern businesses operate.

SME Finance at a Glance
SMEs not using external finance	54%
UK business lending going to SMEs	21% by value
Microbusinesses as a share of SMEs	95.5%
SMEs seeking less than £25,000	Around 60% of recent applicants
Economic contribution	60% of private sector jobs, 51% of turnover

These figures help explain why the issue matters beyond the lending industry. SMEs form a substantial part of the UK economy, but many remain outside the external finance market. 

FCA regulation itself does not appear to be a major barrier. The difficulty sits in complex applications, limited product knowledge and repeated checks. 

— Findings of the FCA review into SME access to finance, 17 September 2026 

Where the FCA wants change 

The FCA is concentrating its next steps on three areas: 

▪ Consumer Credit Act reform: supporting a more proportionate regulatory framework for lending. 

▪ Open Finance: making SME lending a priority use case, which could help lenders assess businesses using financial data shared more efficiently an area where cloud bookkeeping systems such as Xero already give owners an advantage. 

▪ Digital verification: exploring whether businesses can avoid repeating the same customer checks across finance applications, while maintaining appropriate financial crime controls. 

The review focused particularly on lending of £25,000 or less to sole traders and small partnerships, because this area generally falls within the FCA’s consumer credit remit. Lending to limited companies, and much business lending above £25,000, often sits outside that perimeter. 

What does this mean for small businesses? 

The FCA announcement does not create a new filing obligation, and there is no penalty for a business that does not act on the review. 

The risk is more practical. 

If a company does not think about financing until its finances are already tight, it may find its forecasts inaccurate, its accounts out of date, or its ability to explain how much money is needed and why, rather limited. 

That can make an already difficult funding process harder. 

The FCA itself identified information and capability issues alongside wider market problems. Its review found particular challenges for businesses with limited physical collateral, or whose value is largely tied to intangible assets, a familiar position for technology firms and early-stage startups. 

These steps cannot guarantee finance approval, but they can put a business in a much stronger position when discussions with lenders begin. 

Being finance-ready still matters 

The FCA’s work may make the finance journey easier over time, but better regulation and technology will not replace sound financial preparation. 

Businesses still need reliable numbers, a clear understanding of their cash requirements, and financial information that gives lenders confidence in the position being presented. For companies without an in-house finance lead, a virtual finance director can fill that gap. 

Easier access to finance is worth having. Being prepared to use it matters just as much.