The UK Government’s announcement of expanded SME finance support, timed to coincide with the Chancellor’s Mansion House speech, has drawn a measured welcome from the fintech sector alongside a pointed critique of incumbent banks’ ability to serve smaller businesses.
The package includes an expansion of the Growth Guarantee Scheme that is expected to extend support to an additional 12,000 SMEs each year. It is accompanied by £500million in government funding directed at innovative SMEs and scale-ups, new backing for community lenders, and additional export finance measures. The backdrop is a structural funding gap the Government estimates at between £1.6billion and £4.1billion annually.
Laurent Descout, chief executive and co-founder of Neo, the B2B financial platform, said the measures are necessary but also diagnostic. “The UK Government’s plans to help more SMEs access finance through the Growth Guarantee Scheme are welcome, but they also underline how many smaller businesses have been let down by the traditional banking model,” he said.
Beyond the funding gap
Descout’s wider argument is that access to capital is only one layer of the problem. In his view, SMEs that do secure funding still contend with slow customer support, opaque fee structures and inefficient cross-border payment rails when working with high-street or corporate banks. For businesses with international ambitions, he contends, these frictions compound the original financing constraint.
“Limited access to funding is often compounded by slow customer support and persistent problems with cross-border payments, particularly around speed, fees and transparency. For ambitious SMEs looking to expand internationally, these shortcomings can become a serious barrier to growth,” Descout said.
The observation points to a structural gap that government-backed lending alone cannot close: a business may secure a growth loan but still struggle to move money efficiently across currencies, manage supplier payments in multiple markets, or understand what it is actually paying for those transactions.
Market context
Neo operates in a segment that has attracted considerable capital and regulatory attention over the past three years. Several fintech providers, including established names in multi-currency business accounts and cross-border payments, now compete directly with incumbent banks for SME wallet share. The proposition is broadly consistent: transparent FX pricing, faster settlement, and account infrastructure that does not require a relationship manager.
The competitive pressure is beginning to register with traditional lenders. Several UK banks have invested in SME-facing digital products, though critics argue these improvements remain incremental rather than structural. Meanwhile, the FCA‘s ongoing work on business banking transparency and the wider Payment Systems Regulator focus on cross-border payment costs provide a regulatory tailwind for the fintech argument.
Government-backed schemes such as the Growth Guarantee Scheme channel funding through accredited lenders, which include both banks and challenger institutions. As the scheme expands, the question of which lenders are accredited and how SMEs are directed toward them becomes commercially significant for alternative finance providers seeking to position themselves as the operational banking layer behind government-subsidised capital.
Descout’s closing argument captures the sector’s pitch neatly: “Government-backed finance can help SMEs grow, but they also need financial partners capable of supporting that growth across borders.”