Small firms will greet the PRA's announcement with cautious optimism, and will very much hope that the PRA's assertion that lending to SMEs will not suffer as a result of the changes turns out to be the case.
The PRA says it is confident that other changes to the package will avoid an increase in capital requirements for SME lending, addressing the risk to lending levels to small firms.
The loss of the SME Supporting Factor with nothing to replace it would have meant many future lending decisions going against small firms with the greatest potential to grow.
There's much more that can and should be done to improve small businesses' access to finance, especially reducing the disproportionate harm of current practice in relation to personal guarantees.
#sme-lending #bank-of-england #prudential-regulation-authority #capital-requirements #small-business-growth
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