Banks obliged to show SMEs other potential funding sources
Under the initiative UK 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, who 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.
If your lending application is declined or you reject a facility offered on a different basis to the one you applied for, the bank will ask for your consent to refer you to the Designated Platforms. This will occur at the time the decline is communicated to you or when you decline the alternative offer.
NB: The offer of a referral is a statutory obligation and should not be construed as a recommendation.
If consent is given, the bank will send specified information regarding your application to all the Designated Platforms before the end of the next working day.
The FSB have produced a helpful fact sheet explaining the process which is available here.
This is a significant step in enabling the UK’s smaller businesses access to alternate funding sources where their existing bank has been unable to assist them. Whilst there is nothing preventing small businesses approaching these providers directly our experience is that most business owners are too busy running their businesses to have a detailed knowledge of the funding available.
In our opinion, anything that facilitates liquidity in the SME sector is to be applauded, although it is too early to judge if the initiative is being actively adhered to by the tier-one (bank) lenders.
If you have any questions about funding, how to apply or who to approach contact your local Burgis & Bullock office on 0845 177 5500 or use our on-line contact details.