UK firms boosted by over £23m thanks to Bank Referral Scheme

British businesses are getting more financing to help them expand and create new jobs thanks to the Bank Referral Scheme, new figures show today.

UK firms boosted by over £23m thanks to Bank Referral Scheme

Since its creation in 2016, the Bank Referral Scheme (BRS) has helped hundreds of small and medium-sized businesses to access finance after they were turned down by their bank.

New figures now show that over the past 12 months, 889 businesses have raised more than £23 million through the Scheme, which matches them with alternative sources of finance such as revolving credit and asset finance.

This is a significant increase on the previous year and the initiative, introduced four years ago, has now raised £56 million for businesses all over the UK.

John Glen, economic secretary to the treasury, said: “It’s great to see businesses across the UK getting the investment they need to protect jobs and grow. By matching small businesses with alternative finance providers, this important scheme has delivered £23m in funding since July 2019.”

The scheme was launched in November 2016 in response to evidence which suggested that after being turned down for a loan by their bank, small and medium-sized businesses rarely sought other options for financing.

It requires nine of Britain’s biggest banks to pass on the details of businesses they have turned down for loans to online credit brokers.

These platforms are, in turn, required to share their details, in anonymous form, with alternative finance providers, helping to facilitate a conversation between the business and any provider who expresses an interest in supplying finance to them.

Jason Cozens, founder & CEO of UK fintech Glint, said: “The Bank Referral scheme is a lifeline for SMEs looking to secure finance, especially during what has been an exceptionally challenging 2020. The fact that the scheme is necessary at all highlights the inequalities in the current banking system - bigger players gain access to huge amounts of credit whilst some of the UK’s most innovative SMEs are left scrambling around for the minimal funding on offer through alternative finance providers.
“Throughout 2021, it’s likely that more businesses will look to leverage other funding opportunities or target alternatives to traditional banks when it comes to storing their capital, seeking more stable havens that offer an increased chance to maintain purchasing power and mitigate against the risks of another financial crisis. Gold and cryptocurrencies are just two of the alternative currencies businesses may increasingly look to take advantage of.”
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