To ask His Majesty's Government what steps they are taking to ensure a fair balance between banks' risk management practices and the impact on small business growth, particularly concerning the use of personal guarantees for business loans.
Answered on
21 December 2023
The Government recognises the vital importance SMEs play in fuelling economic growth, and it's important they can access suitable lending products.
Many bank lenders are signed up to a voluntary industry code – the Standards of Lending Practice – which contains clear guidance on best practice and ensures that loans which are not captured by consumer credit regulation nevertheless benefit from effective protections. Overall, the Government believes that the current approach – enforcing standards through industry bodies and voluntary codes whilst facilitating innovation and competition – is more likely to drive positive outcomes for businesses than new regulation.