Bank referral scheme

SMEs receive over £15m through bank referral scheme



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The government’s bank referral scheme has helped to secure over £15m of funding since its launch in November 2016 for SMEs turned down for loans by high street banks.

Over the past 12 months, 670 businesses have raised over £12m of funding through the scheme, four times the amount sourced in the previous year.

The bank referral scheme requires the UK’s biggest banks to pass on the details of small businesses they have turned down for loans to online credit brokers, who then help those businesses to secure funding from alternative sources.

“Small businesses are the backbone of Britain, yet many give up on their plans to expand if they can’t get a loan from their bank,” said John Glen, economic secretary to the Treasury.

“Now, however, thanks to our match-making scheme, they have another shot.”

Under the scheme, rejected businesses are automatically offered the opportunity to be referred to three online credit brokers: Alternative Business Funding, Funding Options and Funding Xchange.

Each platform provides access to a range of lenders and products, including business loans, revolving credit, asset and invoice finance.

Loans from the scheme have ranged from £100 to £1.3m, with the average loan size being £17,285.

Alice Hu-Wagner, managing director for strategy, economics and business development at the British Business Bank, said that one of its key objectives was to encourage SMEs to seek the finance which best suited their needs.

“Just over half of smaller businesses consider only one provider when they need funding, however, with over a quarter putting their plans on hold or giving up altogether if they aren’t offered the full amount they were seeking.

“That’s why we’re pleased to provide ongoing support for the government’s bank referral scheme, which is enabling an increasing number of smaller businesses to explore additional options if they are unsuccessful in their original application.”

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