Alternative funding for businesses
Small businesses struggling to access finance from big banks have received almost £4m of funding thanks to an innovative scheme.
The government-backed bank referral scheme has helped 230 small businesses from beauticians to forklift truck training companies, who were rejected for loans by some of the UK’s biggest banks, gain £3.8m from alternative lenders.
The scheme which launched last November requires nine of the UK’s biggest banks to pass on the details of small businesses they have turned down for loans to three finance platforms Funding Xchange, Business Finance Compared and Funding Options.
These platforms then share their details with alternative finance providers and help connect businesses with the providers who express an interest in supplying finance to them.
Stephen Barclay, Economic Secretary to the Treasury, said: “Small- and medium-sized businesses are the backbone of Britain’s economy and it is right they have access to a wide range of sources of finance.”
“A refusal from a big bank should not be the end of the line for a small business and, thanks to our match-making scheme they have another avenue to try for funding.”
Loans resulting from this scheme range from £200 to £500,000, with an average size of £16,000, A number of sectors including construction, retail, technology and science have benefited from the scheme.
Mike Cherry, National Chairman, Federation of Small Businesses, said: “FSB championed the proposals for a mandatory bank referral scheme, to diversify the lending market and boost the provision of alternative finance to those turned down by the main traditional banks.
“To provide further economic benefit across the UK the scheme must now scale-up, with more referrals and more businesses successfully securing finance as a result.”
A fourth finance platform, Alternative Business Funding, will join the scheme from November 2017 to widen further the options available to businesses as the government continues to improve the referral processes to allow more businesses to access the funding they need.
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