Small Businesses: Finance

Treasury written question – answered on 20th September 2021.

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Photo of Stephen Farry Stephen Farry Alliance, North Down

To ask the Chancellor of the Exchequer, whether he is planning to extend the SME Supporting Factor beyond 2022 to maintain lending capacity and businesses' access to finance.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

The "SME supporting factor”, allows firms to apply a discount (ranging between 15% and 24%) to risk weightings for qualifying exposures to SMEs.

This measure was introduced by the EU and deviates from internationally agreed Basel standards.

The recent Financial Services Act 2021, passed in May, delegated responsibility for the implementation of capital requirements relating to the international Basel standards to the Prudential Regulation Authority (PRA). This is subject to an enhanced accountability framework, which requires the PRA to consider the impact of their rules on the ability of firms to provide finance to the UK economy (including SMEs) on a sustainable basis in the medium and long-term.

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