For all the talk about supporting small businesses, lending to UK SMEs has fallen by 20% in real terms over the last decade. The Bank of England estimates a £22 billion gap between what small businesses need and what they can actually access. That means delayed investments, missed opportunities, and thousands of firms holding back on growth because finance feels out of reach.
Historic credit data, rigid scoring systems, and slow manual checks all keep viable SMEs on the sidelines. The result? A system designed to minimise risk ends up limiting growth.
Open Banking offers a way through. With real-time transaction data, lenders can make decisions that reflect the reality of how a business operates today. For SMEs, that means turning financial transparency into confidence, and confidence into funding.
| Key takeaway UK SME lending has fallen by 20% in real terms over the past decade, leaving a £22 billion funding gap. Traditional credit assessments often overlook viable businesses, relying on outdated files and slow processes. Open Banking provides lenders with real-time transaction data, delivering consistency, completeness, and currency in affordability assessments. By accessing clean, categorised cashflow insights, lenders can reduce rejection risk, approve loans faster, and expand access to credit for SMEs. AperiData, as a regulated CRA, enables the trusted data flows that help lenders close the SME funding gap and unlock sustainable growth. |
The SME funding challenge
For the UK’s 5.5 million SMEs, finance should be the fuel for growth. Yet lending to small businesses has dropped.
Part of the problem lies in how lending decisions are still made. Many banks rely on historic balance sheets, traditional credit scores, and manual processes that are slow to deliver answers. That creates two barriers:
- First, finance arrives too late for the opportunities SMEs need it for.
- Second, and more damaging, too many viable businesses are simply turned down.
And those rejections leave a mark. Research shows that 72% of SMEs who’ve had a loan rejected are discouraged from applying again, while 60% admit they’re unaware of the finance options available to them. In other words, the system is dampening their appetite to seek support.
The result is a vicious circle: banks avoid risk, SMEs avoid asking, and the funding gap grows wider.
Why Open Banking matters
The way most lenders assess an SME hasn’t really changed in decades. Finance applications are judged on past accounts, static credit scores, and information that may already be months out of date. For a business with seasonal cashflows, non-traditional revenue streams, or thin credit files, that can mean the difference between approval and rejection.
Open Banking changes this. Connecting directly to a business’s bank accounts provides transaction-level data that shows how a firm is operating today. That means lenders can see real-time cashflow, recurring income, spending patterns, and day-to-day resilience, which is, of course, far richer evidence of financial health than a balance sheet alone.
For SMEs, the benefits are immediate:
- Faster decisions: no waiting weeks for a response.
- Fairer outcomes: assessments based on live data rather than outdated proxies.
- Broader access: even firms with limited credit history can demonstrate affordability.
- Stronger fraud checks: anomalies in spending or suspicious account activity can be flagged instantly, reducing exposure for lenders.
Instead of being penalised by gaps in traditional credit data, SMEs can use the data they generate every day to prove their reliability. And for lenders, this visibility reduces uncertainty and unlocks lending that would otherwise never leave the pipeline.
From funding gap to funding ready
If lenders are to close the SME funding gap, they also need access to the data points that reliably evidence an SME’s financial health. The businesses most likely to secure finance and repay it, share data characteristics.
With Open Banking, lenders can see these signals clearly:
- Up-to-date digital records: real-time bank and accounting feeds provide accurate information.
- Granular categorisation of transactions: payroll, tax, supplier costs and discretionary spend can be distinguished automatically, giving immediate visibility of affordability.
- Continuous cashflow tracking: recurring income, seasonality and spending behaviour become part of the assessment, showing resilience over time.
- Consistency across systems: when bank data, invoices and accounting entries align, confidence in the decision increases.
- Evidence of financial discipline: clean, structured data reflects how a business is run, and supports faster approvals on fairer terms.
For SME lenders, these insights reduce uncertainty, boost decisioning, and expand access to finance for SMEs who might otherwise be overlooked.
The role of Open Banking data enablers
For lenders, the challenge is also having the right data to make confident, scalable decisions. Even well-run businesses can appear high-risk if their financial data is fragmented or incomplete. Open Banking data enablers bridge that gap by turning raw transactions into intelligence lenders can trust.
The value lies in three areas:
- Consistency: Clean, categorised data removes noise in affordability assessments, giving underwriters a clear, standardised view.
- Completeness: Multi-account coverage and enriched transaction data provide a holistic picture of business performance, reducing reliance on thin or outdated files.
- Currency: Real-time updates replace historic statements, so risk is assessed on how the business is performing today, not last year.
This is where AperiData adds value. As a regulated CRA, we deliver transaction categorisation, affordability insights and credit file enrichment that fit seamlessly into existing decisioning processes. That means fewer false declines, faster approvals, and better fraud detection alongside affordability checks.
Closing the SME funding gap with Open Banking data
The UK’s £22 billion SME funding shortfall is a daily reality for businesses held back by outdated assessments and lenders limited by incomplete information. The solution lies in smarter data.
Open Banking gives lenders a transparent, real-time view of SME cashflow and affordability. It allows businesses to demonstrate financial health as it stands today, reducing rejection risk and speeding up access to capital. But the real impact comes when this data is made usable: categorised, contextualised, and delivered in ways that drive confident decisions.
That’s where AperiData steps in. As a regulated credit reference agency specialising in Open Banking, we provide the transaction insights that bridge the gap between SMEs and lenders. By enabling clean, trusted data flows, we help organisations move beyond historic credit files and unlock fairer, faster lending decisions.
Ready to turn the funding gap into lending growth?
AperiData provides the real-time Open Banking insights that make SME funding decisions simpler, safer and more scalable.
👉 Get in touch to see how AperiData can help you close the gap and unlock SME growth.
If you have any unanswered questions, you might also like to read through our most frequently asked questions below.
FAQs
Why is SME lending falling in the UK?
SME lending has dropped by 20% over the past decade. Traditional credit models rely heavily on historic accounts and rigid credit scores, which often exclude viable businesses. This has contributed to a £22 billion funding gap.
How does Open Banking improve SME lending decisions?
Open Banking provides real-time transaction-level data on income, expenses, and cashflow. This allows lenders to make faster, fairer, and more accurate decisions based on how a business is performing today, rather than outdated statements.
What are the key benefits of Open Banking data for lenders?
Open Banking data delivers:
- Consistency – clean, categorised data for clearer affordability checks.
- Completeness – multi-account and enriched transaction views.
- Currency – live data instead of historic records.
How does Open Banking data help reduce rejection rates?
By providing a transparent view of cashflow and affordability, lenders can approve more applications with confidence. Viable SMEs who might otherwise be declined based on thin files or outdated credit data can demonstrate financial health in real time.
What role does AperiData play in SME lending?
AperiData is a regulated credit reference agency that specialises in Open Banking data. We categorise transactions, enrich thin credit files, and provide affordability insights that fit seamlessly into lenders’ decisioning processes, enabling faster approvals and reducing risk.
Can Open Banking data help with fraud prevention?
Yes. Real-time transaction insights can highlight unusual activity or anomalies in spending patterns, supporting stronger fraud detection at the point of application. This helps lenders protect both their portfolios and their customers, while speeding up the decisioning process.
