ONLY five per cent of small businesses that have been referred to alternative finance providers under the Bank Referral Scheme have gone on to get a loan, official data shows.
The Bank Referral Scheme, launched in November 2016, mandates nine of the UK’s largest high-street banks to pass on the details of small businesses they have turned down for loans to three finance aggregator platforms – Alternative Business Funding, Funding Options and Funding Xchange.
The latest Treasury data shows 30,000 small businesses which were rejected for finance from one of the big banks have been referred under the scheme as of 30 June 2019, but just 1,650 have secured more than £32m of funding.
This equates to 5.6 per cent of applications going on to receive funding from alternative providers such as peer-to-peer lenders.
Approvals appear to have ramped up in the 12 months to 30 June 2019, with 796 businesses accessing £16m.
The Treasury said the conversion rate for firms who make contact with a platform has been more than 16 per cent since the end of 2018.
“It’s great to see this scheme go from strength to strength, with nearly 1,700 British businesses up and down the country accessing the funding they need,” John Glen, economic secretary to the Treasury, said.
“It’s not right that so many small and medium-sized businesses simply had to give up when they were turned down by their bank for a loan.
“I now want to see more of our trailblazers and entrepreneurs use this scheme to get the backing they need to grow and help boost our economy.”