ALTERNATIVE Business Funding (ABF), one of three finance aggregators approved for the government’s bank referral scheme, is launching a £6m fundraise to pursue its ambitious expansion plans.
The small- and medium-sized enterprise (SME) funding platform aims to provide more than £500m of finance to more than 160,000 businesses over the next five years and it hopes to expand its reach into other business services including personal lending.
“ABF is at a very exciting time, and with the ‘go compare’ culture rapidly growing in popularity – we see that it is only a matter of time before, as with other financial products, those businesses seeking commercial finance will go online to compare the funding solutions open to them, before even visiting their bank,” said Adam Tavener, ABF’s chairman.
“With our strong brand and scalable technology, we also see a real opportunity to move into other business services such as equity finance, personal lending, business banking, and credit cards.”
ABF matches SMEs with funding providers, working with more than 100 lenders including peer-to-peer platforms Blend Network, LendingCrowd, ThinCats and Growth Street.
The company has appointed boutique advisory firm Lazarus Consultingnew investment partner by the end of the year to support its expansion plans.
It aims to use the proceeds from its fundraise to invest in technology such as Artificial Intelligence and Open Banking, as well as marketing activities. It is also eyeing international expansion.
The government’s bank referral scheme was launched in 2016, mandating high street banks to refer rejected business borrowers to approved finance aggregator platforms, which would match them with alternative funding options. However, it has attracted criticism due to slow deal flow.
Earlier this year, the chief executive of working capital provider Iwoca said the scheme had “failed to deliver any meaningful impact”. In an open letter to then-Chancellor Philip Hammond, Christoph Rieche pointed to figures showing just 902 loans have been completed through the scheme, of which Iwoca financed more than half.