Government publishes SME Finance Charter’s “five pledges”

The charter is a voluntary agreement that covers loans and overdrafts, as well as asset finance including hire purchase and leasing, stock lending and invoice finance. Its five pledges were signed off by the Business Finance Council, a collaboration between finance providers, business organisations and the government. 

Those signed up to the pledge say they’re “open for business and ready to lend”, with the lender describing their offer to businesses, including the types of applications they’re looking to support. They’re also committed to being responsible, putting the interest of their customers first. 

The second of the pledges sees them commit to helping firms “build back better” after Covid with lenders now providing various resources to help businesses return post-pandemic. This might include web resources, fact sheets, videos and workshops - together with face-to-face support and signposting.

The lender will describe what they expect in an application, for example, management accounts, cashflows and any security, as well as explain the options that would be open if a business’s application is declined. 

As well as this, the pledge outlines a lender’s commitment to treating its customers fairly. As part of this, they may have signed up to an independent scheme such as the Standards of Lending Practice for business customers, the Finance and Leasing Association’s Business Finance Code or the Invoice Finance and Asset Based Lending Standards Framework. 

Finally, lenders will work with the British Business Bank (BBB) to help make the finance market work better for small and mid-sized businesses. As part of this, the lender will signpost the BBB’s Finance Hub and Institute of Chartered Accountants in England and Wales’ Business Finance Guide which offer information on finance options.