You’d almost think the Chancellor was on your side, singling out businesses as the greatest contributor to GDP growth, and claiming that ‘businesses are the lifeblood of the UK economy.’ But in reality, despite all the bank bashing and efforts to get more finance in the hands of businesses over the last few years, nothing has actually changed.

In fact, the situation is arguably getting worse. If you look hard at the reams of statistics published by the British Bankers’ Association and the Bank of England, you will find, tucked away, that business overdrafts are down almost 50% in the last three years alone. As banks remove the humble overdraft, they divert businesses into much more complex offerings like factoring.

Why do they do it? So they can make more money from a ‘service’ which isn’t technically lending (you’re selling them assets i.e. invoices), hiding the true cost of credit in myriad fees and lots of small print. Sound familiar?

How can they get away with it? Commercial finance is largely unregulated. If you’re a limited company, you’re basically on your own. There’s no regulator looking out for you in the way that the Financial Conduct Authority protects consumers, so for example, there is no requirement for commercial finance to carry an Annual Percentage Rate (APR). So banks sell to businesses on attractive headline rates, while padding the contract with fees instead. Let’s be clear, if you’re using invoice finance, you’re basically extending credit to your suppliers, and paying the bank for the privilege to do so. Madness.

There’s some hope on the horizon as the Competition and Markets Authority (CMA) continues its investigation into the supply of SME banking services. The preliminary findings are a lengthy read, and largely focus on personal current accounts rather than SME banking, which is a missed opportunity to fix commercial finance and the next financial services scandal in the making.

The one line summary from the CMA findings to date? Surprise! There’s not enough competition. The suggested possible remedies are a step in the right direction but don’t go nearly far enough. A price comparison website for business banking is a nice idea, for example, but without making the disclosure of APR mandatory, you won’t know what’s included in the price.

Businesses truly are the lifeblood of the economy, financial services are the heart. However, the patient needs open heart surgery to prevent cardiac arrest.

Attributed to James Sherwin-Smith, CEO at Growth Street, alternative provider of business overdrafts.