Small businesses gain millions in finance through HM Treasury’s Bank Referral Scheme
Alternative Business Funding (ABF) has been announced as the next platform to join the scheme, which has helped 230 companies gain alternative finance
Her Majesty’s Treasury has today announced that 230 start-ups and small businesses who were previously rejected for loans have now secured them through the Bank Referral Scheme – with these companies gaining a collected total of £3.8m in finance.
Launched in November 2016, the government-backed scheme has seen small businesses across a variety of industry sectors draw down finance in amounts ranging from £200 to £500,000, with an average drawdown of £16,000.
With nine of the UK’s biggest banks currently taking part, the scheme ensures that small businesses whose loan applications are denied by such banks are helped to find finance elsewhere.
The “match-making” scheme requires that, after turning down a small business’ loan request, participating banks refer the company’s details to a selection of finance platforms, which in turn pass the details on to alternative lenders who may be able to supply the business with finance.
Since its launch, over 8,100 businesses have been referred under the scheme.
The finance platforms currently taking part are Funding Xchange, Business Finance Compared and Funding Options, with HM Treasury revealing today that a fourth platform, Alternative Business Funding (ABF), will join the scheme from November 1 2017.
The addition of ABF, whom HM Treasury has appointed on the advice of the British Business Bank, is intended to further widen the finance options available to start-ups and small businesses.
According to figures cited by HM Treasury, 220,000 small and medium enterprises sought a loan or overdraft in 2016, but while 25% of these were initially declined by their bank, only 7% were referred to other sources for help.
Stephen Barclay, the economic secretary to the Treasury, 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 our match-making scheme they have another avenue to try for funding.
“Over 200 businesses from beauticians to forklift truck training firms have received the money that they need to grow and we expect this number to increase as the scheme matures.”