‘Not just viable but valuable’: securing finance for the smallest SMEs

Financing for our smallest companies needn’t be a burden. In fact, making capital more accessible has the potential to spark growth well beyond the high street.

Embedded finance, when designed properly, coupled with brokers who adopt smarter processes and fairer practices, can transform the economics of small ticket loans. Together, they create a system where serving the smallest companies is not just viable but valuable.

The barriers to SME finance

A £25,000 working capital request from a local retailer can take just as long to arrange as a six-figure deal, leaving many brokers little choice but to focus on bigger cases. Trying to do it alone is also difficult, as small businesses without financial support often struggle to navigate lengthy application forms filled with technical clauses.

Add to this that many business owners remain unaware of the products available or are discouraged by past rejections. Opaque terms and commission-driven incentives erode trust, while the frequent demand for personal guarantees creates an unpalatable risk for directors without property to pledge.

The British Business Bank reports that around six in 10 small firms never apply for finance because they are unaware of available products, while research suggests that seven in ten are discouraged from applying again after rejection. That inertia adds up, and Allica Bank estimates the annual SME debt finance shortfall at £20bn.

Overcoming these barriers demands a shift in focus. Instead of expecting entrepreneurs to chase finance, realistic options must be delivered to them, seamlessly embedded into the tools and platforms they already use to run their businesses.

Turning barriers into opportunities

Embedded finance was never seen as a silver bullet, but it was expected to play a major role by placing credit directly inside the platforms businesses already use. In practice, it has often fallen short. Too many journeys still collapse into a form and a callback, reducing it to a digital facade that masks a traditional process.

To be effective, embedded finance needs to go further, with genuine end-to-end integration, supported by better broker practices, clearer communication and smarter regulation.

A number of players are addressing this by combining information from data-rich environments (accounting packages, card terminals) with open banking, Companies House data and credit bureau feeds. Matching engines quickly identify viable lenders and products so businesses can be pre-qualified in seconds.

With one click, loan applications are submitted with a high likelihood of funding. This transforms the economics of small-ticket lending: instead of draining resources, low-value cases can be processed at scale, making them commercially viable. Brokers can then focus on the human elements, guiding small businesses through the loan application toward a suitable loan.

Unlocking finance for the smallest SMEs

Small businesses make up the majority of UK firms but remain the most underserved. For small business owners human support is still essential when explaining terms, clarifying risks and building trust.

A £25,000 loan will barely register on a bank’s balance sheet, but for a small business it can be the difference between standing still and taking the next step forward, whether that’s hiring a new employee, investing in equipment or weathering a tough season.

By focusing on these underserved segments, brokers can step into the gap left by traditional finance, using technology to reduce the operational burden and unlocking finance to fuel growth.