According to statistics 71% of business owners will only try one lender when seeking finance for their business. This means that many of those businesses could be missing out on potential sources of alternative finance.
A government scheme introduced in November last year hopes to solve this problem for business through a bank referral scheme. The scheme encourages banks to pass on the details of applicants who failed to secure funding to alternative providers.
This effectively gives those businesses a second chance to secure alternative finance and it appears a growing number of those businesses are benefiting as a result. More than 8,000 businesses were referred via the scheme in the first 9 months following its introduction. It has to be said, however, this still represents only a small minority of the 50,000 businesses turned down for loans each year in the UK.
The availability of finance for businesses to fund growth and expansion is extremely important to the UK economy and any initiative which provides more options to businesses to secure that funding can only be good news.
The key to the success of these schemes is awareness and by encouraging the banks themselves to help in the process, the whole process for SMEs is set to become a lot less daunting for SMEs.