Small and Medium-sized Enterprises: Interest Rates

Lord Leong Excerpts

Wednesday 13th September 2023 Lords Chamber

[The Earl of Minto (Con)]

The noble Baroness makes a very good point. CDFIs have been extremely successful and, if one looks at the plethora of lending opportunities right now, it continues to broaden because of the new entrants into the market. We will certainly take it up with the major banks and see where we get.

[Lord Leong (Lab)]

My Lords, SMEs are now looking to move from survival to growth as they recover from the impact of the pandemic. However, many SMEs that relied on government-back pandemic loans are finding the cost of borrowing far higher now. What can the Minister offer the millions of SME owners and employees whose prospects are hampered by the 15-year peak in interest rates?

[The Earl of Minto (Con)]

The interest rate is a Bank of England matter. The reason why it has gone up, as we all know, is to battle inflation, which is incredibly important. Having said that, in business, financial rigour and accountability are paramount in managing a business, particularly through a growth phase. We saw insolvencies fall to quite a low level during the pandemic because of the Government’s support, and the noble Lord is right that we are starting to see the number creep up again. The Government will do all we can in providing both advice and teams to help businesses in trouble but, when it comes down to it, it depends very much on the financial viability of the business going forward.