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Bank Lending

Chancellor launches consultation on ensuring banks refer SMEs to alternative finance providers - Platform Black and comment

By CreditMan Wednesday, March 19, 2014

Following today’s Budget announcement that the Chancellor will launch a consultation into whether to legislate the Banks to refer SMEs they turn down to alternative funding providers, Louise Beaumont and Adam Tavener, two of the founders of said:

Louise Beaumont, co-founder of Platform Black, which is one of the founding alternative finance providers that launched, commented:

“We wholeheartedly support the commitment from the Chancellor to launch a consultation on how best to ensure that the banks refer to alternative funding providers those SMEs that they themselves are unable to fund. Last week the Business Secretary singled out SME finance portal,, as the place to signpost those SMEs looking for non-bank funding.”

“ was born out of a collaboration between the UK’s seven leading alternative finance providers. Collectively, Platform Black, CrowdCube, Funding Circle, Market Invoice, Seedrs, Zopa and account for 85% of the alternative non-bank funding market and have provided to date more than £580m to SMEs, supporting around 80,000 jobs.”

“The overwhelming impediment to Britain’s small businesses getting the funding they so desperately need has quite simply been that they do not know where to turn if the banks are unable to provide a product that is suitable for them. George Osborne announcing that a consultation process will be launched on how to bring this referral process into law is the shot in the arm that the UK’s economy needs – especially as Britain’s small businesses account for over 48% of the UK’s private sector turnover. This is also an extension of the informal way in which some of the banks have already started to refer some of their SME clients onto the alternative funding providers and will help ensure that all SMEs receive an opportunity to consider all finance options available to them.”

Beaumont, concluded:
“Liberum, the investment bank, forecasts that alternative funding providers could originate £535bn in financing by 2024, which would represent 50% of the gross volumes in the UK and US consumer and UK SME market. This backing from George Osborne today significantly helps make this forecast a reality.”

Adam Tavener, Chairman of the catalyst for the launch of the portal, said: “Today’s announcement by the Chancellor could pave the way for banks to refer businesses to the alternative funding providers via our recently launched portal - which signposts business owners to a variety of different funding options.”

“This is also a real opportunity for a collaborative culture to develop between the banking and alternative sectors, not just to refer businesses but to work together on multi source deals that provide exactly the right shape of funding package for the business owner. Better signposting, would give businesses – particularly SMEs - safe access to approved lenders, while helping banks keep UK businesses growing by encouraging innovative or complimentary funding.”

Tavener, concluded:
"It’s not that banks don’t want to lend to businesses, but they are often prevented from doing so by capital constraints. They have also been loathed to refer rejected SMEs to specific alternative finance providers because of the regulatory risk involved.”