New Tech Could Unlock £5bn in SME Credit by Fixing ‘Readily Fixable’ Profile Errors

The UK’s small and medium-sized enterprises (SMEs) are missing out on an estimated £5billion in credit annually due to readily fixable, yet unrecognised, issues within their corporate credit profiles. This is according to new research by FXE Technologies , conducted as part of an industry coalition led by the Centre for Finance, Innovation & Technology (CFIT).

The findings, which coincide with a new UK Government review into the Mandatory Bank Referrals programme , highlight the critical role that digital fundability tools can play in unlocking this credit gap. FXE’s analysis of 24,000 businesses declined for loans since 2019 found that approximately 65 per cent had profiles with “readily fixable” issues that were restricting their access to credit. Common problems included missed payments to suppliers, late filing of accounts with Companies House, and excessive use of overdrafts.

A consumer-grade solution

To tackle this education gap, the CFIT coalition is testing a prototype digital dashboard called the Funding Health Checker, developed by FXE. The tool aims to provide SMEs with the kind of simple, personalised feedback on loan applications already commonplace in consumer lending. The dashboard shows SMEs the data lenders use—including information from Credit Reference Agencies (CRAs), Companies House, and alternative data sources—flagging concerns and suggesting actions to improve creditworthiness.

A pilot demonstrated the tool’s effectiveness: 80 per cent of participating SMEs said it significantly improved their understanding of their fundability, and 85 per cent planned to take the suggested steps. Katrin Herrling, CEO and co-founder of FXE Technologies, said the research shows that half of businesses turned down by banks could access funding if they had the right guidance, adding that the Funding Health Checker gives business owners the clarity and tools needed to turn rejection into opportunity.

Addressing the double-decline crisis

The new prototype is particularly timely given the challenges facing SME finance. The UK Government has opened a consultation on improving the Mandatory Bank Referrals programme, which was designed to connect businesses rejected for credit with alternative lenders. However, 94 per cent of firms referred to a second lender are currently rejected again. These “double-declines” contribute to a culture where half of all UK business owners become “permanent non-borrowers”.

Rob Haslingden, head of impact assessment and engagement at CFIT, said that by educating SMEs about their financial data, they can help millions of businesses take the necessary remedial action, emulating how similar services in consumer credit have transformed access to mortgages and personal loans. The CFIT-led coalition, which includes support from Mastercard, Lloyds Banking Group, and HSBC UK , aims to develop tech-driven solutions to improve transparency and confidence among business owners.

Mark Barnett, global head of small and medium enterprises at Mastercard, echoed this sentiment, noting that it is exciting to see the industry move toward consumer-grade experiences for businesses, empowering them with personalised insights to take action and unlock new opportunities for growth.