New scheme launched to match small businesses with alternative finance sources
03 Nov 2016
Small businesses who are unable to access finance from big banks will be matched with alternative finance options under a new Government scheme.
The new programme will require nine of the UK’s largest banks to automatically pass on the details of small businesses they have rejected for finance to three finance platforms: Funding Xchange, Business Finance Compared and Funding Options.
These platforms will then share the details with alternative finance providers and help to ‘facilitate a conversation’ between the business and any provider who expresses an interest in them.
RBS, Lloyds, HSBC, Barclays, Santander, Clydesdale and Yorkshire Bank, Bank of Ireland, Danske Bank and First Trust Bank are all required to offer access to these finance platforms – although small businesses must give permission before their details are shared.
Government figures show that last year some 324,000 small and medium-sized enterprises (SMEs) sought a loan or overdraft. 26% of these were initially declined by their bank, and only 3% of those declined were referred to other sources of help.
Chancellor of the Exchequer, Philip Hammond, 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 the finance platforms being launched today, now it won’t be.’
Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), welcomed the announcement. He said: ‘Small firms struggling to access finance will now automatically have a new way to get the support they need to invest and grow.
‘This change will boost alternative lenders, bringing more competition and choice in the market beyond the big banks.’