14 Nov 2017
‘Matchmaking’ scheme to pair SMEs with potential lenders
Small businesses struggling to access finance from big banks are being matched with alternative finance options, under a new government scheme.
Nine of the UK’s biggest banks will 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 these details with alternative finance providers and go on to facilitate a conversation between the business and any provider who expresses an interest in supplying finance to them.
These new rules make it easier for businesses to access finance when they have been turned down by traditional lenders.
RBS, Lloyds, HSBC, Barclays, Santander, Clydesdale and Yorkshire Bank, Bank of Ireland, Danske Bank and First Trust Bank, will all have to offer access to these finance platforms, with small business having to give their permission before their details are shared.
New options
Research shows that 71% of businesses seeking finance only ask one lender and, if rejected for finance, many simply give up on investment rather than seek alternative options.
Last year 324,000 small and medium-sized business 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. We are determined to maintain the prosperity of our business sector and to support an environment where small businesses can grow and thrive.
Mike Cherry, National Chairman, Federation of Small Businesses, said: “Small firms struggling to access finance will now automatically have a new way to get the support they need to invest and grow. FSB pushed hard for these reforms, and today’s announcement is good news as the government delivers on them. This change will boost alternative lenders, bringing more competition and choice in the market beyond the big banks.”
Ritchie Whyte, a Corporate and Business Advisory Partner at Aberdein Considine, has welcomed the move.
”Access to capital is one of the biggest issues faced by small and medium-sized business, so anything which increases the diversity of funding options available to business owners is good news," he said.
Legal support for small businesses
Aberdein Considine offers comprehensive legal support to small businesses across Scotland. Both Ritchie and his fellow Corporate Partner Jacqueline Law are recommended by the independent Legal 500 guide.
Aberdein Considine offers comprehensive legal support to small businesses across Scotland. Both Ritchie and his fellow Corporate Partner Jacqueline Law are recommended by the independent Legal 500 guide.
To speak to either of them, call 0333 0044 333 or click here.