Equifax

How will CCDS change the SME lending market?




The Commercial Credit Data Sharing (CCDS) scheme may reduce the SME finance gap, an industry expert has claimed.

The CCDS scheme – a government initiative mandated under the 2015 Small Business Enterprise and Employment Act 2015 –  aims to stimulate competition and encourage new entrants in SME lending, covering any company with a turnover of up to £25m.

“CCDS will open up secure sharing of detailed business current account data and up-to-date information on the performance of existing loans and corporate cards from the leading business banks,” said Nic Beishon, head of commercial at Equifax.

“This data, now available, will help close the financing gap by giving lenders a more complete picture of a business’s financial health, in particular benefiting SMEs who only occasionally apply for finance.

“With an in-depth view on a borrower’s financial activity, banks and non-bank lenders will be able to offer SMEs more competitive loans.”

According to the BDRC Group’s SME Finance Monitor Q4 2017, only 41% of SMEs seeking finance were confident that a bank would lend to them.

Nic added: “Access to CCDS data will also give lenders the ability to track a customer’s financial status, alerting them to potential problems with repayments, allowing lenders to identify an appropriate course of action early on.

“This will help them adopt lending standards introduced last year, better supporting SMEs in times of financial stress.

“This data-sharing scheme has the potential to revolutionise how lenders evaluate loans, allowing them to make faster, more informed lending decisions.

“A healthy SME sector will help the UK economy flourish; combined with industry initiatives, including Open Banking and the Payments Services Directive 2, CCDS will transform SME lending and facilitate growth in the sector.”

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