Bank Referral Scheme is finding its stride as number of businesses successfully accessing finance quadruples

Publication: LinkedIn
4th September 2018

Funding Xchange welcomes the news that 900 businesses have been successful in accessing finance through the Government’s scheme. More than 40% of these businesses have used the Funding Xchange platform to secure finance – with Funding Xchange supporting both the smallest (£100) as well as the largest deal (£1.3M) concluded.

Funding Xchange highlights that sectors like construction, health and retail, that have faced a particular challenging environment in 2018, have benefited the most from the initiative.

Funding Xchange, one of the designated finance platforms for helping to signpost businesses to lenders, welcomes the announcement from HM Treasury that 10% of those businesses that make contact with the designated portals are getting the funding they need.

Data from Funding Xchange shows that 75% of applicants using their portal require less than £25,000, and predominantly are seeking short-term funding. Funding Xchange has been able to help up to a third of incorporated businesses compare available terms from lenders and conclude funding agreements. This success is based on an accurate matching of the business’ profile with lenders’ underwriting criteria — ensuring that any business has the best chance to access the right funding.

Commenting on the release from HM Treasury, Katrin Herrling, Chief Executive of Funding Xchange, said, ‘It is clear that the Government’s Mandatory Referral Process is now bearing fruit. Businesses that have been unsuccessful in securing bank funding, have the opportunity to use portals, such as Funding Xchange, that reach more than fifty lenders and government support schemes like Start up Loans. We see our role not in competition with the high street banks, but more as partners and today’s figures are evidence that this partnership is working.’

The scheme has been particularly well received by sectors that have found it more difficult to access bank finance. Construction, Retail and Health — sectors that have been experiencing disruption or funding pressures — account for approximately 25% of UK businesses but 45% of the funding that has been secured by referred businesses through Funding Xchange.

Construction, in particular, is a sector that has had to look beyond their bank. Stephen Pegge, Managing Director of the banking trade body, UK Finance, noted specifically this week that lending to construction businesses has fallen by 6.9% in the past year as banks have become more cautious to lend to those in the construction and building supply chain industries.

There are lenders, however, that are supportive of the sector, with the construction sector being almost 90% more likely to secure funding than the average business referred through the mandatory referral process.

‘This is a key area of the economy,’ says Katrin Herrling, ‘and one which I am pleased we have found a way of addressing through the Mandatory Referrals Process. The development of new financial solutions like Single Invoice Finance and Peer-to-Peer lending is complimentary to the funding that banks are able to make available.’

Read the full statistics from the British Business Bank here