24 January 2017
When you’re a small or start-up business, getting the funding you need to achieve your dreams can be a challenge. We look at the new Bank Referral Scheme and how it could help SMEs grow.
The Bank Referral Scheme is a Government-led initiative designed to make it easier for businesses to get the funding they need to achieve their goals.
Launched at the start of November last year, the scheme aims to help small and medium-sized enterprises who have applied for a business loan from a bank and been turned down. In this situation, many entrepreneurs are unsure what to do next but under the Bank Referral Scheme, major lenders who reject an application must refer them to another possible source of funding.
If your application is turned down, banks are able to refer you to one of three platforms: Funding Xchange, Bizfitech and Funding Options. You do not have to accept the referral and even if you do, it is completely up to you whether you choose to go ahead with it.
If you do accept the referral, then you will probably be asked to provide a bit more information about your business and its finances, including what you intend on spending the funding on. The platform you have been referred to will then use these details to match you to a lender which meets your needs.
There is no guarantee that your business will be given the funding it needs, but the fact you have been turned down by a bank will not be held against you.
Running a business takes a lot of effort and many entrepreneurs can struggle to find the time and energy to research all the different funding options available to them. The referral scheme signposts businesses to potential lenders and gives them somewhere else to go after a rejection.
Almost one in five SMEs have an application for a loan turned down according to the British Bankers’ Association (BBA). Many business owners may simply scrap their plans or try to struggle on without funding instead of trying to find an alternative lender.
At BizSpace, we offer a wide variety of affordable and flexible solutions for small and start-up businesses. With accommodation ranging from offices and co-working spaces to workshops and industrial units, you don’t have to commit to a long-term lease so you can start small and then move if and when you grow.