Rarely short on research, the alternative funder has now discovered that a fifth of small businesses and 12% of medium-sized firms were rejected for a bank loan or overdraft in 2014. The value of the loans that were declined in Q3 2014 reportedly totaled £1.44bn, a 28% increase from the Q2 figure of £1.123bn. These results were unearthed via an analysis of British Bankers Association (BBA) data.
“Many small and medium enterprises are still finding it difficult to secure credit from banks, and this is leading to an increase in demand for alternative lenders.”
“The recent government announcement that banks will be forced to forward on the details of small and medium firms they reject for funding to alternative lenders will ‘open up the floodgates’ to new forms of lending for businesses. Our research shows that 65% of small and medium businesses support this move.”
Fleximize has now lent more than £3m to the nation’s small businesses, and SME credit applications via the platform are said to have more than doubled in Q4 2014 in relation to the previous Quarter.
As AltFi recently demonstrated, the alternative finance scene is already steadily closing shut the funding gap that opened in the wake of a decline in lending under the FLS scheme. And whilst there’s little doubt that the mandatory referral scheme will have a positive impact on the alternative business funding community when it comes into effect – some observers are wary. There are of course some loans that should simply never be written – whether by a bank or by a platform. The referral scheme will be instrumental in opening the minds of business owners to the variety of funding options that exist. However, in the face of a presumed hike in demand, the onus will be on the platforms to continue to manage credit responsibly.