Firms rejected finance by high street banks because of tougher lending criterias being introduced pushed higher demand for lending to the finance marketplace.
Funding Options saw applications of more than £1bn worth of loans from 10,000 businesses in March as well partly driven by a 100 per cent increase in the number of Banking Referral Scheme overflows.
Uncertainty for small businesses is growing rapidly with many facing difficult choices and limited cashflow. David Keene, chief marketing officer at Funding Options, says the government’s Coronavirus Business Interruption Loan Scheme is only helping businesses that are low-risk, however, meaning thousands are being rejected.
“There are a number of businesses out there that normally would be able to access finance, but currently can’t under more stringent lending criteria. The key to untying the Gordian knot is to bring more alternative finance providers, B2B marketplaces and other fintech organisations into the solution to complement the big high street banks,” he said.
“Our data show that businesses are really worried about their cash flow. They aren’t able to access loans through the normal routes, and lenders are understandably more risk averse during this crisis. The UK fintech sector is agile and able to rise to this challenge, the government needs to reevaluate how it is supporting the UK’s independent businesses, because, at the moment, many are falling through the cracks,” he added.
Funding Options says it is calling on the government to bring more alternative lenders and B2B marketplaces to support UK independent businesses.