Solving financial inequality for smaller businesses in the UK

This seminar is part of the Centre for Business Law and Practice postgraduate research seminar series, where postgraduate students present their work and answer questions about it.

In the UK, small and medium-sized enterprises (SMEs) play a vital and indispensable role in the national economy, as they account for 99.9% of all businesses, hiring 60% of total employees in the country, and producing nearly half of UK’s Gross Domestic Product (GDP).

However, in contrast, British SMEs only obtained 38% of total bank credits from financial institutions, while 62% of bank loans are granted to large corporations. This great inequality, between smaller businesses and large companies, in obtaining bank loans resulted in the financial difficulty of SMEs in the post-crisis era. It also created a precious opportunity for the growth of alternative financing mechanisms outside traditional banks and security markets, which could be a potential solution to the financing puzzle of SMEs.

This presentation will mainly talk about a new breed of challenger banks in the UK which focus on the SME financing, as well as the rapid development of peer-to-peer lending (P2P) industry.