Banks should refer rejected businesses to alternatives

The Government is currently consulting over proposed rules to make banks refer customers rejected for funding to alternative providers.

Alternative Business Funding (ABF) was launched earlier this year to offer businesses seeking alternative funding a single portal to find the right finance from equity crowdfunding to P2P loans, pension-led funding and invoice finance.

It has now offered to be placed under independent management to offer banks a unified place to refer customers to – a fair solution which could be implemented quickly. 

Adam Tavener, chairman of and catalyst for the ABF non-bank funding collaboration, said: We are delighted with the feedback we have been getting throughout this consultation process.

It seems that both the relevant government departments and our peers recognise the effectiveness of the ABF portal in guiding an SME owner quickly and simply to a likely source of finance, without cost, bias or risk.

Louise Beaumont of Platform Black, said: We also recognise the need for swift action on improving access to finance for this vital economic sector and acknowledge the governments determination to get something done, and fast. 

“Our submission therefore includes the offer of placing the ABF portal under a neutral and independent management structure, so that it can be easily adopted and expanded to form the basis of the private sector platform solution to this problem.

The outcome of the Government’s consultation is now closed and the Government’s response is expected soon. 

Speaking at its launch in March, Vince Cable, the business secretary, said: “Too many businesses are put off looking for finance if they are turned down by their bank. 

“By putting the onus on banks to refer these businesses to other sources of finance, we can help make sure the potential of the countrys small businesses isnt lost. A better referrals system will be good for competition, and good for the economy.”

Read more on our monthly focus: The future of funding

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