The chancellor of the exchequer, Philip Hammond, has launched a new scheme that will offer UK SMEs a clearer path towards alternative finance providers.
Recent research by the British Business Bank has revealed that every year 100,000 small businesses in the UK are refused £4 billion in loans from the main British banks. According to the Financial Times, out of the 324,000 SMEs that applied to their bank for a loan or overdraft last year, 26% were initially declined, and only 3% of these went on to seek alternative finance options.
The new government scheme will ensure that nine of the UK’s biggest banks pass on the details of the SMEs they reject for funding to three alternative finance platforms: Funding Options, Business Finance Compared, and Funding Xchange. These platforms will then distribute the information to the most appropriate alternative finance providers operating today (the businesses are required to give their express permission before their details are shared).
The chancellor Phillip Hammond comments:
“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.
“We are determined to maintain the prosperity of our business sector and to support an environment where small businesses can grow and thrive.”
The nine banks involved with the scheme are: RBS, Lloyds, HSBC, Barclays, Santander, Clydesdale and Yorkshire Bank, Bank of Ireland, Danske Bank and First Direct.
British Business Bank CEO Keith Morgan said that the initiative has great potential to make a significant difference to UK SMEs:
“It gives businesses additional opportunities to secure funding, alternative providers access to a bigger market of potential clients, and major banks an extra service to offer their business clients when they cannot themselves provide finance.”
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