One in three small and medium-sized enterprises (SMEs) based in the UK who sought access to finance were denied in the last year, new research from Yolt has found.

The payments platform calculated that this has resulted in an estimated £3.7bn lost in potential funding for UK SMEs.

Yolt’s research found that in the last year, the average SME sought to borrow £331,275 in financing to help grow their business. However, on average, small businesses managed to borrow approximately £50,000 less than this.

The study, based on findings among 500 interviews with senior leaders in UK SMEs, indicated that business leaders are seeking similar amounts in the coming year (£332,289) with a specific focus on investing to help grow their business including new equipment (36%), product development (21%) and improving technology (17%).

For small businesses denied funding, leaders cited the age of their business (31%), the levels of existing business debt (22%) and the lack of sufficient collateral (20%) as factors in the decision. Medium-sized businesses, those with 50 to 250 employees, were the most likely to be refused for funding (56%).

Yolt CEO, Nicolas Weng Kan, said: “SMEs represent the foundation for a thriving economy, in the UK they represent 99% of all private sector businesses; as such, it’s important we nurture SME growth. Traditional borrowing, limited as it is, can make access to finance difficult. This can impede growth and make it hard for small businesses to achieve their true potential.

“We can see a clear desire from small business leaders in our research to use the power of their data and insight to allow for more accurate decisioning when it comes to borrowing money; open banking is the solution to this.”

The research suggested that small business leaders are open to using technology to refine the borrowing process, with two in three SMEs (66%) willing to securely share their bank account data to improve their chances of borrowing money.

“By employing open banking technology, lenders can get a clearer picture of a business’ behaviours and can then provide financing with far more confidence,” Weng Kan added.

“It’s not about taking on extra risk but accessing a great level of insight. This technology also makes the application process quicker and automated, allowing for efficiencies on both sides.”

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