Increasing the Choice of SME Business Finance in the UK

Designated finance platform

As a designated finance platform, Alternative Business Funding will be referred small businesses struggling to access finance from nine of the UK’s biggest banks.

Research has shown that 71% of businesses seeking finance only ask one lender (usually their bank) and, if rejected for finance, many simply give up on investment rather than seek alternatives.

The Bank Referral Scheme

The scheme, launched in November 2016, requires the banks to pass on the details of small businesses they have turned down for loans to designated finance platforms.

These platforms will then share the details of the business owner with the most appropriate alternative finance providers on their platform and go on to facilitate a conversation between the business and the providers.

HM Treasury, acting on behalf of the British Business Bank, announced that during the first nine months of operation, 230 small businesses had gained almost £4 million of funding through the scheme.

Loans ranged from £200 to £500,000, with an average size of £16,000, benefitting sectors including construction, retail, technology and science.

Alternative Business Funding, acting outside of the scheme, has illustrated over the last year how it has increased the availability of SME finance in the UK, answering the funding requirements of small businesses that have either enquired directly or have been recycled into the platform by other lenders.

The number of ABF funder deals increased by over 125 per cent from March 2017, compared to the previous six months.

Success stories include award-winning chocolate shop Cocoa Amore in Leicester. Peter Gardner accessed Quick Capital’s cash flow finance via the ABF portal when producing a large order of Easter eggs.

Peter said: “My business is seasonal, with 40% of the year’s turnover generated in December alone. For the past few years I have been producing solid chocolate Easter eggs for another company. This year, the order doubled to 500 eggs. The eggs are expensive to produce, so I needed cash flow finance to help while creating the products.”

When Tom and Dave, founders of Edinburgh specialty coffee shop Brew Lab, wanted to expand their business, they accessed bridging finance from iwoca via the ABF portal.

They said: “The bank moves really, really slowly and unfortunately as a small business your time scales aren’t always aligned with a big corporate body. With iwoca, the application process was super easy, very quick, very efficient and the help was there when it was needed.”

Founder Caroline Whittaker needed a loan to take on further orders and fund multiple projects at multi-award-winning Designer Bathroom Concepts in Doncaster.

Caroline found a match with Fair Business Loans using the ABF platform to help with expansion of the business offering luxurious and bespoke bathrooms and equipment.

As we first floated the idea of a collaborative approach to funding at the “Innovators in Finance Summit” meeting at 10 Downing Street, designation seems like the end of a chapter in this journey, and the start of a new one, which will see ABF help deliver the scheme that we first proposed.