Almost 800 businesses have found alternative finance options through the Bank Referral Scheme (BRS) in the past 12 months, new figures have revealed.
The finding forms part of the Treasury’s new analysis of the BRS, an initiative which aims to link small and medium-sized enterprises (SMEs) with an alternative finance provider after they have been turned down by a mainstream bank or building society.
In the last 12 months alone, the scheme has helped 796 businesses raise nearly £17 million of funding.
This is compared to the £32 million raised across 1,700 businesses since the scheme’s launch in 2016, representing a significant boost in the performance of the programme.
Under the BRS, Britain’s nine biggest banks are required to pass on the details of businesses they have turned down for loans to online credit brokers Alternative Business Funding, Funding Options and Funding Xchange.
The growing businesses are then linked with alternative finance providers who specialise in financing riskier business ventures through products such as business loans, revolving credit, asset finance and invoice finance.
The idea of the BRS came after research revealed that 49 per cent of small businesses were forced to either cancel or put their investment plans on hold if they failed to secure the full amount of finance they required.
Commenting on the figures, the Economic Secretary to the Treasury, John Glen, 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.”
Managing Director for Strategy, Economics and Business Development at the British Business Bank, Alice Hu-Wagner, added: “One of the British Business Bank’s key objectives is to encourage and enable smaller UK businesses to seek the finance best suited to their needs. We’ve seen the value of lending through the government’s Bank Referral Scheme increase by a third over the last year, which points to its growing use amongst smaller businesses.”
According to the latest figures, the average loan secured through the BRS increased from £17,285 in 2017/18 to £19,399 in 2018/19.
If you’re an early stage start-up and would like to look at funding options, please get in touch. We have the experience required to lead entrepreneurs through the investment process, from Seed funding rounds to private investment and more.