Think of the owner of an independent café on your local high street who is running out of options as costs rise and margins shrink. Or perhaps your plumber, unsure whether they can afford to spend out on new equipment needed to take on more jobs.
These sorts of scenarios are playing out up and down the UK. Even though SMEs comprise 99.8% of UK businesses (source), at the smaller end their owners tend to toil away with little financial support. Many lack access to accountants or structured financial planning – let alone a CFO. Nor do they have the big teams or the time to do much about it.
For small business owners, every hour spent trying to understand their finances is time they could be serving customers, winning work or simply keeping their venture alive.
A broken system and funding gap
In other words, life is tough for small businesses. In fact, MPs recently published new analysis showing small businesses are operating under pressures similar – if not worse – to those experienced during the Covid pandemic. During the pandemic there was at least coordinated financial support to help out. Today though, there is little to stop rising costs, uncertain demand and tighter financial conditions bringing many small businesses to their knees.
A lack of access to business credit is one of the greatest hurdles. I know this from the businesses I speak to everyday in my role of co-founder of Menna, which exists to support SME owners. Time and again, business owners tell me they can’t secure the finance they need.
The system seems to be against them. The Bank of England has identified a £22 billion SME funding gap and a 20% decline in lending in real terms in the past decade (source). Loan acceptance rates now stand at less than 50% (source).
It becomes a vicious circle: uncertainty about how lenders will assess them can deter small businesses from even attempting to secure funding. Public data shows that SME confidence in applying for finance is at a 10-year low, with just 45% feeling confident that a banking facility would accept their finance request in Q4 2025 compared to 66% in 2016 (source).
Why SMEs are turning to AI
At the heart of the problem is a traditional financial services sector that was designed for either individuals or larger companies. Your average local business owner sits somewhere awkwardly in between the two.
Small businesses do have strengths that can play to their advantage though. One is the ability to be nimble and make decisions quickly, without being weighed down by the bureaucracy and slow decision-making of larger organisations.
This is one reason why small businesses are grasping the opportunity provided by AI. They can quickly adopt and adapt new tools. They can also take advantage of AI integrations in common SME products they already use on daily basis, whether it’s for accounting, marketing or whatever else.
Research shows more than half (54%) of SMEs now use AI regularly (source), a proportion that is rapidly rising. As AI adoption accelerates among small businesses, finance is emerging as one of its most transformative applications. While much of the focus about AI for business focuses on automation or efficiency, its potential to improve financial understanding for small businesses may prove just as important. And AI agents can take that to the next level altogether; this, rather than the general purpose assistants like ChatGPT, is where SMEs can really steal a march.
How AI agents unlock access to finance
By combining AI agents and rich data, SMEs can already see what lenders see, helping them understand how to improve their credit profile. Complex credit and financial data can be replaced by plain-language explanations, early warnings and practical actions. Instead of discovering issues only when finance is declined, business owners can see what is influencing their credit worthiness – from late payments and outstanding invoices to their cashflow, how long accounts have been open and whether information is up to date. This helps them understand how everyday business operations affect future funding options and take steps to strengthen their position sooner.
With AI agents, small businesses won’t have to wait for a ‘no’ to understand their credit worthiness. Instead they can get clear, early visibility of their potential loan eligibility. Equally, if the bank does say no, AI agents can help them understand why and actions they can take to help them improve.
In effect, AI agents can bring the kind of financial visibility that larger businesses have long relied on to companies that previously operated in the dark. When more businesses feel confident seeking finance at the right moment, investment and expansion become far more achievable.
In short, AI agents can put credit power back in the hands of small businesses. This is already happening. And so, what does this mean for our local small businesses that are struggling? The plumber could finally have enough confidence to spend out on that new equipment or training that enables them to take on more work. And the café owner can finally understand their financial position clearly enough to decide whether borrowing to invest, manage cashflow, or expand is a risk worth taking. Imagine how transformative that could be for 99.8% of UK businesses.
