Finance Fred Heritage · 3 November 2017
Matchmaking scheme launched to set small businesses up with alternative lenders
Small company owners struggling to access finance from large banks will be matched with alternative funding options under a new government initiative. From now on, nine of the UK’s biggest high street banks will pass on the details of small businesses that have been rejected for loans to three alternative finance platforms Business Finance Compared, Funding Xchange and Funding Options. The three platforms will then share the details with providers of alternative finance, before introducing small businesses with any provider which express an interest in supplying them with finance. The aim of the matchmaking’scheme is to make it easier for small firms to access finance when theyve been turned down by traditional lenders. The nine banks that have signed up to the matchmaking scheme are RBS, Lloyds, HSBC, Barclays, Santander, Clydesdale and Yorkshire Bank, Bank of Ireland, Danske Bank and First Trust Bank. From 1 November, small business owners will have to give their permission before banks can share their details. Recent government research found that 71 per cent of business owners seeking a loan only ever ask one bank. If they’re rejected, many simply give up on finding investment, rather than search for alternative options. Some 324, 000 SMEs in the UK sought a loan or overdraft last year, according to the Treasury. Of these businesses, 26 per cent were rejected by their bank, while just three per cent of those were subsequently referred to an alternative provider. Commenting on the new matchmaking scheme, chancellor Philip Hammond said: A refusal from a big bank should not be the end of the line for a small business and, thanks to [these] finance platforms, 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.
ABOUT THE EXPERTFred Heritage
Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.