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Alternative lenders get Budget lift

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19th Mar 2014
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Banks could be forced to direct rejected loan applicants to alternative finance providers, the government has announced in the Budget.

Under new legislation banks could be legally obliged to help match small firms that are turned down with alternative lenders.

The government will shortly launch a consultation on mandatory referrals in an effort to increase sources of finance for small businesses and spur on the alternative marketplace.

James Meekings, co-founder of Funding Circle, told our sister title BusinessZone.co.uk: “We are already talking to banks about the possibility of lead referrals for small businesses. We do see ourselves as complementary to banks.

“A core part of a bank's business is having a positive banking relationship with their customer so partnering with a non-bank funder where there is no risk of them losing their current account business makes a lot of sense.”

Marc Glazer, chief executive at Boost Capital, also welcomed the Budget proposal: “The Treasury’s move to develop a route for those businesses to find alternative lending is very encouraging, especially for those who struggle to meet the stringent lending standards set by high street banks.”

The announcement follows the recent launch of an alternative finance clearinghouse portal by seven of the UK's biggest alternative funders - CrowdCube, Funding Circle, Market Invoice, Platform Black, Seedrs, Zopa and Pensionledfunding.com.

Today’s Budget also included the announcement of a new survey into the state of the business banking sector, which will examine the way banks perform for small businesses, with the first results published in May.

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By BellaWooder
24th Mar 2014 10:18

Alternative financing is a great solution which will bring business to a new level. Britainloan will anyway stay demanded in the nearest future but more relevant option would display it in a long-term period. This is an impetus to create new better products and to reduce price. 

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By Melanie221
24th Mar 2014 14:08

This is great and will save businesses a lot of time and stress should they be rejected by the banks. No doubt a rejection from the bank can leave SME's feeling deflated but being given an alternative means they can remain hopeful.

There are so many alternatives out there, such as cash advances from the likes of United Kapital , online lenders such as Capiota, crowdfunding, angel investors, invoice finance, etc - I do wonder what kind of alternatives the banks will be referring to.

 

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