Small businesses are to be provided with a financial guide on alternative sources of funding if they fail to raise loans from their current account providers.
The guide, put together by the British Business Bank, aims to enable businesses to make informed decisions and will be available by the end of the year when the big banks will have to offer any rejected business a referral to a designated, online finance platform.
These platforms will give alternative providers the opportunity to offer viable businesses the finance they need. If businesses decide to take part in the referrals scheme, they may find that they have many more choices.
The proposal is to counter the fact that, at the moment, more than half of SMEs rejected for a loan by their current account providers do not consider other options.
Keith Morgan, CEO of British Business Bank, speaking at a Business, Innovation and Skills committee this week, said: “I would like to see more awareness of the options and more confidence among small businesses to go and seek out other options. It is still the case that the smaller you are, the shorter your track record or the more ambitious your growth plan, the less likely you are relatively to get the finance you need.
“We’ve made a good start around improving levels of awareness and information to help small businesses get a better handle of what’s important – what’s the right kind of finance for them at this stage and where would they seek to find it – but I think we can do a better job.”