Finance denied, futures delayed: Umazi exposes the UK’s SME funding breakdown
Outdated verification systems are choking small business growth, with serious consequences for public services, market competition, and the cost of living
New research from digital identity platform Umazi highlights a deepening crisis at the heart of the UK economy: small and medium-sized enterprises (SMEs)—the nation’s engine of innovation, employment, and essential services, are being systematically strangled by outdated and inefficient verification systems that deny them the finance they need not just to grow, but to survive.
According to the findings in its report, Broken ID, Broken Growth: The UK’s Verification Chokehold, nearly one-third of SMEs surveyed said they lacked access to necessary funding. Even more troubling, almost a quarter of those who applied for financial support were rejected or subjected to further delays, despite submitting extensive documentation and investing significant time in the process. Half of these rejections were due to what lenders described as a lack of trading history or an insufficient track record.
“Opening a business bank account should be a basic, seamless step for any new enterprise – yet nearly a quarter of SMEs face delays or rejections, even after submitting extensive documentation, “said Cindy van Niekerk, CEO and founder of Umazi.
“If something this fundamental remains so complex and time-consuming, how can we expect entrepreneurs to overcome the far greater economic challenges ahead in 2025 and beyond?”
More than 30% of SMEs were forced to manually upload PDF documents, 31% had to print and scan physical paperwork, and 27% were required to provide non-digital originals, highlighting just how far removed the process is from modern, digital-first expectations.
Among those whose applications were rejected, 20% received no explanation at all. Others were denied on the grounds of “insufficient business history” (40%) or an inability to meet excessive documentation demands (10%).
“It’s no wonder that promising businesses are stalling. This isn’t just about growth being delayed—it’s about opportunity being denied altogether.”
The report highlights that these aren’t isolated administrative issues. They are systemic failures with far-reaching consequences.
“As SMEs struggle to raise capital and establish the basic tools they need to operate, their ability to expand, hire, and innovate is severely limited. The ripple effects extend far beyond the private sector: fewer SME success stories means fewer services, less competition, and higher prices for the public.”
The inability of SMEs to scale directly affects sectors already under pressure, such as healthcare, retail, hospitality, and education.
“These are industries where SMEs often fill crucial gaps and deliver more flexible, community-rooted services than their larger counterparts. Without access to capital, many of these businesses are forced to scale back or shut down, compounding the difficulties facing consumers in an already challenging economic climate. When SMEs can’t grow, it doesn’t just hurt their bottom line—it hurts all of us,” van Niekerk continued.
“We’re seeing the cost-of-living crisis deepen, yet we’re denying capital to the very businesses that could make essential goods and services more affordable. It’s economically reckless and socially unsustainable.”
The report also highlights the deeply antiquated systems still used for business verification. Many SMEs are forced to submit the same documents repeatedly across different lenders, often by manually scanning and emailing PDFs or even mailing original paper documents. In an era defined by digital innovation, such processes are not only inefficient—they are indefensible.
“Frustration among SMEs is widespread. Many describe the finance application process as laboursome, outdated, and unfair,” said Cindy. “It’s telling that an overwhelming 95% believe a digital business identity—one that securely stores verified information and enables instant sharing—would have completely transformed their experience and improved their access to funding.”
Van Niekerk concludes by emphasising that this is not a matter of technological ambition—it’s a matter of economic necessity.
“We already have the tools to fix this; what’s missing is the urgency. Every viable business turned away due to slow, manual verification is a loss, not just to the entrepreneur, but to the public, to the economy, and to the country’s long-term competitiveness. If we want SMEs to lead us out of economic stagnation, we must stop holding them back with paper-based systems that belong in the past.”