14 August 2017
Small businesses who had finance requests turned down by major UK banks have received £3.8million through alternative providers matched through the bank referral scheme.
Launched in November last year, the government-backed scheme requires 9 of the UK’s largest banks to pass on details of small businesses they have rejected loan applications for to three finance platforms – Funding Xchange, Business Finance Compared and Funding Options. These platforms are designed to link up businesses with alternative finance providers.
Research shows that 71% of businesses seeking finance only ask one lender and, if rejected for finance, many simply give up on investment rather than seek alternative options. (BIS/BMG Research) In 2016, 220,000 small and medium sized businesses sought a loan or overdraft. 25% of these were initially declined by their bank and only 7% of those declined were referred to other sources of help. (SME Finance Monitor Q4 2016)
Through the banking referral scheme, 230 small businesses have drawn down finance averaging £16,000 per business.
Whilst not all businesses can obtain finance, due to inadequate cash flow or weak business proposals or business plans, the scheme does give small business owners more options.
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