Praises the government for rolling out SME finance schemes during the crisis and highlights the success of Bounce Back Loans, with £50 billion in lending. Suggests considering an initiative to set up a Tees Valley regional mutual bank. Hollinrake emphasised the critical role of access to finance for SME growth, citing that 73% of SMEs would prefer slower growth over borrowing. He highlighted a 25% reduction in lending from commercial banks post-2008 compared to a 20% increase by German regional mutual banks during the same period. Hollinrake called for a more dynamic business environment and suggested setting up regional mutual banks to support SMEs, as seen in Germany. He expressed concern about the idea of turning loans into grants, highlighting a potential moral hazard. He pointed out that many businesses used their own funds or repaid their loans during the pandemic, questioning why some would receive free government money while others did not. He argued that the Bank of England's modifications to MREL are insufficient for challenger banks like OakNorth, which could lend more if these limits were adjusted. He questioned whether it is counterintuitive to have bail-in requirements aimed at protecting taxpayers while also concentrating systemic risk in a few large banks. I would like to put on record my thanks to the British Business Bank, which has done a fantastic job in engaging with the APPG over the last 18 months or so and a tremendous job in helping to get that money out of the door. In terms of releasing equity capital—the Minister talked about pensions, which is a very good move by the Treasury—I think Octopus also suggest we allow ISA investments into unquoted companies which, again, could provide a source of equity finance for some of the good, high-growth companies he was talking about. Would the Minister consider having a discussion with the Treasury about this?

Congratulates Mark Pritchard on securing the debate and highlights the British Business Bank's offerings, including learning modules for entrepreneurs which help mitigate lending risk and provide knowledge to be successful. Does the hon. Member agree that high street banks could benefit from investing more time in understanding SMEs they lend to, really taking the time to understand the business model and the entrepreneur throughout the whole lending process? We need to ensure access to affordable finance UK-wide, so can the Minister tell us what steps the Government are taking to make sure that Scottish SMEs have the right level of accessibility? Government Department procurement processes usually mean that the cheapest quote wins the contract, which might mean that SMEs struggle to compete or operate at greater cost to their business. What steps are the Government taking to level the playing field for these contracts and encourage SMEs to apply?

She acknowledged the debate's importance and highlighted concerns about regional inequality, access to finance for SMEs post-COVID, and the impact of high debt levels. She cited a Financial Times report indicating that one-third of UK small businesses are highly indebted, compared to 14% before the pandemic. Fellows also mentioned TheCityUK's proposal for a business repayment plan and emphasized the need for government action to ease VAT burdens on energy bills.

Small and medium-sized enterprises are crucial to the UK's economy, employing millions of people and fostering innovation. The pandemic has strained businesses financially, necessitating government support schemes such as Bounce Back Loans and CBILS. However, challenges remain, including labour shortages and rising material costs. Pat McFadden emphasized the role of community development financial institutions (CDFIs) in providing loans to SMEs when mainstream banks decline them, citing an example from his constituency. He also discussed MREL funding rules for challenger banks, suggesting higher thresholds could allow more lending to SMEs.