Over the past nine months, 230 small businesses – which were rejected for loans by the UK’s major banks – have secured £3.8m through the bank referral scheme.
The government-backed scheme requires nine of the UK’s biggest banks to pass on the details of small businesses they have turned down to three business platforms, which will rise to four in November.
Over 8,100 businesses have been referred under the scheme.
The scheme currently uses platforms Funding Xchange, Business Finance Compared and Funding Options with Alternative Business Funding becoming the fourth platform on 1st November.
The platforms share the details of SME applicants provided by the major UK banks with alternative finance providers, including challenger and specialist banks.
Metro Bank and CYBG are lender partners of Funding Xchange and Business Finance Compared respectively.
“A refusal from a big bank should not be the end of the line for a small business and, thanks to our matchmaking scheme, they have another avenue to try for funding,” said Stephen Barclay, economic secretary to the Treasury.
“Over 200 businesses from beauticians to forklift truck training firms have received the money that they need to grow and we expect this number to increase as the scheme matures.”
Mike Cherry, national chairman at the Federation of Small Businesses, said it had championed the use of a mandatory bank referral scheme to help diversify the lending market.
“We welcome that government has delivered the three platforms and congratulate the scores of firms that have benefited in the scheme’s early stages.
“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.”
Research has found that 71% of businesses seeking finance only ask one lender and, if rejected, many simply give up.
“As highlighted by our recent 2017 Small Business Finance Markets report, the most common response from smaller businesses when they do not get the full amount of finance applied for is to give up or cancel their plans,” said Keith Morgan, CEO of the British Business Bank.
“This can mean businesses missing potential expansion opportunities, with a knock-on effect on UK economic growth.
“It is, therefore, heartening to see the positive start made by the bank referral scheme.”
SIGN UP TO OUR NEWSLETTER TO RECEIVE MORE NEWS LIKE THIS STORY
Masthaven teams up with Intrinsic Financial Services
Masthaven has announced a new partnership with Intrinsic Financial Services as the bank looks to enable more brokers to access its range of residential mortgages.
Cambridge & Counties refinances Oxfordshire nursery
Cambridge & Counties has refinanced an Oxfordshire nursery, which is creating 50% more places for local children.
How important are brokers in the specialist banking market?
Brokers are an important channel for newly launched banks, a number of industry professionals have claimed.
BFC Bank enters UK market
BFC Bank has launched into the UK banking market offering financial services to UK SMEs.
Liam Fox launches GREAT Innovation in Action Awards
International trade secretary Liam Fox has launched the GREAT Innovation in Action Awards to find the best partnerships between UK and Asia-Pacific companies.
Teachers Building Society names new board of directors chair
Teachers Building Society has named Julie Nicholson as the new chair of its board of directors.
Church of England introduces contactless payments
The Church of England has introduced contactless, virtual terminal and SMS mobile payments to over 16,000 churches, cathedrals and religious sites across England.
FIBA workshops to feature live deal room
The Financial Intermediary & Broker Association (FIBA) has announced that its upcoming regional workshops will give brokers the chance to interact with partner lenders in a live deal room.
Metro Bank to enter Scottish mortgage market
Metro Bank has announced that from 5th April it will be expanding its mortgage business into Scotland.
Do challenger banks need to collaborate on Open Banking?
Collaboration between challenger banks on Open Banking could be a powerful message to consumers and the established players, according to an expert at a recent event.