HSBC, Barclays, Santander and Lloyds are four of the nine participating banks
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.
Small business organisations have welcomed the government’s matchmaking scheme. National chairman at the Federation of Small Businesses (FSB), Mike Cherry, said: This change will boost alternative lenders, bringing more competition and choice in the market beyond the big banks.
the FSBpushed hard for these reforms, and today’s announcement is good news as the government delivers on them. Small firms struggling to access finance will now automatically have a new way to get the support they need to invest and grow.
This latest initiative follows the launch of a small business credit data sharing scheme in April this year. Under that scheme, banks and credit reference agencies must share SME credit information equally amongst alternative finance providers.
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