Small businesses that have been rejected for finance by banks may be matched with alternative finance providers under a government scheme.
The service will see participating banks pass on details of businesses they have rejected to alternative finance platforms.
According to figures from the Treasury, 71% of businesses looking for finance only request it from 1 lender.
Of the 324,000 SMEs that applied for a loan or overdraft last year, 26% were declined by their bank. 3% of those declined were referred to other sources of help.
Keith Morgan, CEO of the British Business Bank, said:
“It gives businesses additional opportunities to secure funding, alternative providers access to a bigger market of potential clients, and major banks an extra service to offer their business clients when they cannot themselves provide finance.”
Alternative sources of business finance
While alternative forms of business finance may not be as well-known as the more traditional bank loan or overdraft facilities, there are other options available to small businesses.
- unsecured loans – the lender and business agree on an amount, interest rate and time frame
- asset finance – funding secured against business assets
- invoice finance – the lender effectively purchases a company’s unpaid invoices
- crowdfunding and peer-to-peer lending – online platforms that connect businesses to multiple individual investors or lenders.
Contact us before committing to a business finance strategy.