Small Business Finance

Applying for Small Business Finance is a problem where the big banks have already rejected a loan.

Small Business FinanceFrom the beginning of November 2016, nine of the UK’s biggest banks will have to pass on the details of small businesses they have rejected for finance to three Government initiated finance platforms. This can only be carried out with the permission of the Company concerned. But if granted, these are:-

  1. Funding Xchange
  2. Business Finance Compared
  3. Funding Options

These platforms 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.
This makes it easier for businesses to access finance when they have been turned down by traditional lenders.

There are nine banks which have to conform with this. They are:-

  • RBS
  • Lloyds
  • HSBC, Barclays
  • Santander
  • Clydesdale and Yorkshire Bank
  • Bank of Ireland
  • Danske Bank
  • First Trust Bank

Applying for Small business finance

There is evidence that most businesses seeking finance only ask one lender and, if rejected for finance, many simply give up on investment rather than seek alternative options.

In year 2015 there were 324,000 small and medium sized business who sought a loan or overdraft, 26% of these were initially declined by their bank and only 3% of those declined were referred to other sources of help.

The Government view

Small and medium-sized businesses are very important to Britain’s economy and they should have access to a wider range of sources of finance.


Without going into too many meaningless testimonials, these moves have been approved and endorsed by:-

Keith Morgan, CEO of the British Business Bank

This new government initiative, supported by the British Business Bank, has the potential to make a real difference to smaller business finance markets in the UK. It gives businesses additional opportunities to secure funding, alternative providers access to a bigger market of potential clients, and major banks an extra service to offer their business clients when they cannot themselves provide finance.

Mike Cherry, National Chairman, Federation of Small Businesses

Small firms struggling to access finance will now automatically have a new way to get the support they need to invest and grow. FSB pushed hard for these reforms, and today’s announcement is good news as the government delivers on them. This change will boost alternative lenders, bringing more competition and choice in the market beyond the big banks.

Small business finance conclusion

The Government has provided alternative finance platforms designed to help small businesses access the finance they need to invest and grow.

Combined with the SME (Small and Medium Enterprises) credit data sharing scheme, which requires banks and credit reference agencies to share SME credit information equally with all providers, increases competition in business lending by making it easier for challenger banks and other lenders to make good credit decisions on businesses to help them get the funding they need.


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