Government launches long-awaited Bank Referral Scheme
The government has announced the launch of its Bank Referral Scheme, giving UK SMEs greater accessibility to funding options.
Originally announced by George Osbourne, banks are required to offer small businesses they have rejected for finance the opportunity to have details shared with designated finance platforms.
The Treasury has designated Funding Xchange as a finance platform, which is working with nine leading UK banks to help secure funding solutions if the bank is unable to help.
The Government policy aims to help the 25% of small business loan applicants who are initially declined by the banks.
Many of these businesses simply cancel their growth plans rather than explore alternative options that may be more suitable.
The British Business Bank estimates that 100,000 businesses have their applications for debt rejected each year, representing a possible funding gap in the UK of £4bn.
Katrin Herrling, Co-Founder and CEO of Funding Xchang, explained: “The launch of the Bank Referral scheme is a significant step in helping the UK’s small businesses source funding more easily.
“Even if the bank says ‘no’, Funding Xchange will be there to help tens of thousands of small businesses access the best funding solutions that are right for them.
“When we founded Funding Xchange, we started with the need to create transparency of available funding solutions - including terms and pricing - so that business owners can feel in control of the process and confident to move forward.”
Funding Xchange describes its offering as a means of turning the traditional credit process on its head by ensuring lenders come to the business to make offers.
Katrin continued: “We have developed a unique platform that encourages lenders to compete directly and provide offers to our customers.
“Both businesses and lenders see the terms offered by different providers – ensuring that a business, for the first time, has the chance to compare all available offers with one simple application.
“We think this solution is particularly suited for the referral process as it gives those business owners who have been declined by banks a realistic view of lenders who want to fund them and the terms offered – building confidence that they understand the terms and pricing before pursuing one particular solution.”
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