Unlocking an estimated £5bn in SME credit with financial health tools

CFIT‑led coalition explores how data‑driven tools could halve SME loan declines

The Opportunity

200,000

businesses with flexible credit profiles

£5bn p.a

in unlocked credit identified

45%

increase in business confidence

Read the full report

CFIT’s SME Coalition identifies how digital tools could improve the lives of 200,000 small businesses and unlock access to potentially £5bn in credit annually by helping businesses become more financially fit.

Findings come as the UK Government has been consulting with industry on how to improve access to finance and seeks to report on its findings from consulting with industry on changes to the Bank Referral Scheme and sharing of commercial credit information.
Two financial health tool prototypes developed by the Coalition aim to demonstrate to businesses how lenders make decisions based on their financial data. The tools provide recommendations and coaching on how to fix issues and make them lending-ready.
The CFIT-led coalition, supported by Mastercard, Lloyds Banking Group and HSBC UK, collaborated to prove the value of this type of tech‑driven solution to help small businesses that might be reluctant to apply for finance.

Explore how the tools work

The Scale of the Problem

The current SME lending journey: Where it breaks down

Fewer than half of SME loan applications now succeed. Despite the Bank Referral Scheme (BRS) providing an alternative route to accessing finance, fewer than 1 in 10 SMEs ultimately obtain it.

How fixable data issues create £5 billion in missed credit

Coalition Partner, FXE Technologies examined the credit profiles of 24,000 businesses declined for loans since 2019. Approximately 65% had “readily fixable” financial profiles, resulting in unsuccessful loan applications which could have been approved.

Scaled to the whole population of UK SMEs, that equates to over 200,000 businesses and £5 billion of potentially accessible debt financing left on the table.

What was holding them back?

Lack of awareness of how lenders assess affordability
Businesses being unprepared when applying for credit
Providing inaccurate and insufficient financial data
Insufficient information shared on why a business is declined for a loan

Excessive use of overdrafts, missed payments to suppliers, filing accounts late with Companies House, and accounts showing a net negative asset position were all issues that contributed. These problems reflect a readiness gap that can largely be resolved with education and guidance, empowering the business to take action to improve their credit profile.

The Coalition’s Solution

Digital tools enable small business growth by unlocking faster, fairer access to finance

New digital financial health tools could soon change the lending landscape, giving businesses the kind of simple, objective and personalised feedback on their financial health that is already commonplace in consumer lending. Coalition Partners worked with CFIT to test examples of two financial health tools with businesses and advisors.

The Funding Health Checker

A digital dashboard for SME fundability

FXE Technologies’ Funding Health Checker is a mature, operationally ready prototype built on FXE’s digital lending platform. It gives businesses a tailored, lender-aligned view of their financial position using the FXE’s Finance-Readiness Model underpinned by data from Companies House, personal and commercial credit information, the firm’s cashflow and debts to review a company’s credit application, flagging areas of concern and suggesting actions to improve creditworthiness.

The Small Business Coach

A personalised coaching tool for SME growth

Small Business Coach is a nascent prototype, created using a set of wireframes and functional data components, including AI-driven coaching. It seeks to support businesses before a credit need has materialised, when there is still time to build financial readiness in a structured way. The Coach collects basic information about the business, the owner’s ability to engage, and their immediate priorities, then provides guidance calibrated to the business’s life stage to support financial management and improve resilience.

The SME Credit Gap in the UK

What research reveals about missed lending opportunities

By giving small businesses transparency into how lenders assess their credit applications – pinpointing exactly what constrains eligibility and offering practical steps to address those barriers – most businesses that were previously declined loans could gain access to finance. The Coalition tested this premise and gathered evidence that demonstrated the impact of enabling small businesses to become lending-ready.

Our report explores the findings, the tools and the changes needed to close the lending gap.

Read the full report

Key Recommendations

The coalition identified five key recommendations for Government, regulators and industry, developed collaboratively with coalition partners. These provide valuable insights that will help to inform and complement ongoing initiatives that support small business growth and access to finance.

Industry Perspectives

Leaders across banking, policy and payments share their views

Katrin Herrling, CEO and co-founder of FXE Technologies, said:

“Our research shows that half of businesses turned down by banks could access funding if they had the right guidance. The review of the Mandatory Bank Referrals scheme is the moment to address this. Funding Health Checker gives business owners the clarity and tools they need to turn rejection into opportunity.”

Rob Haslingden, Head of Impact Assessment and Engagement at CFIT, said:

“By educating SMEs about their financial data, and providing these insights either prior to or at the point of credit application, we can help businesses take the necessary remedial action to improve their creditworthiness, emulating how similar services in consumer credit have transformed access to mortgages and personal loans. The results of our prototype testing are particularly timely, as the Government drives forward its work to improve SMEs’ use of digital tools and expand their access to finance.”

Mark Barnett, Global Head of Small and Medium Enterprises at Mastercard, said:

“Mastercard is committed to reducing the funding gap for small businesses by pursuing industry partnerships that improve transparency around credit decisions. It’s exciting to see the industry move toward consumer‑grade experiences for businesses—mirroring how credit tools have transformed access to mortgages and personal loans. By educating SMEs about the financial data lenders use, we’re empowering them with personalised insights to take action and unlock new opportunities for growth.”

Stephen Welton, Chair of British Business Bank, said:

“We support the work and findings of CFIT’s Coalition on SME access to finance. The British Business Bank is committed to working with both industry and government to provide a channel through which Financial Health Tools can be deployed to help SMEs improve their financial resilience. There are clear synergies between the Bank’s access to finance remit and CFIT’s commitment to driving innovation in financial services, and shaping policy that benefits businesses, government and the wider economy.”

Tom Wood, HSBC UK Head of Business Banking, said:

"HSBC UK is pleased to be working alongside industry leaders in this coalition to establish innovative solutions that provide SMEs with the insights needed to enhance their credit profiles and unlock growth opportunities. This initiative aligns with our commitment to supporting small businesses in making financing more transparent and accessible.”