While securing a loan for a mature business in good health is relatively straightforward, for smaller businesses and start ups going to the bank for a business loan can often end in rejection and disappointment.
In the past this would usually lead to business owners giving up on their growth and expansion plans unaware there might be alternative sources of funding readily available. This is why the government came up with a scheme that referred those businesses that were turned down for a bank loan to smaller lenders or companies offering alternative sources of finance such as asset finance.
The referral scheme was introduced in November 2016 and according to the government it has been successful in sourcing £15 million of funding for small business with loans ranging from £100 to £1.3 million.
Such is the demand for funding in the small business sector, the amount loaned via the referral scheme quadrupled in its second year with 670 businesses benefitting from the extra funding in the last 12 months alone.
These results while amounting to a small proportion of the amount of money being lent to businesses each year show just how many businesses might not have received the vital funding they needed to develop.