New banking regulations a threat to small business lending The cost of borrowing for small businesses including many motorsport businesses could increase by a third due to the UK’s approach to the latest round of Basel regulations. The Prudential Regulatory Authority is consulting on the changes but has said it intends to depart from international standards by imposing higher collateral limits on secured business lending than unsecured business lending. Additionally, the regulator has not followed the EU in keeping lower capital requirements for small business lending including motorsport businesses. Richard Davies, chief executive of Allica Bank, said these two issues will have a “very material effect on small business lending. We estimate the overall impact is 34% higher capital requirements” for lending in the SME sector. Additionally, Karen Bradley, chair of the challenger bank all-party parliamentary group said there was “concern among parliamentarians” about the effects the proposals will have on “challenger banks who lend to SME’s and the ability of the SMEs themselves to raise funds.”