Banks who turn down small companies for loans must now offer to refer the businesses to other lenders who are likely to be able to help them.
It is part of a package of policy changes that are designed to ensure that Britain’s small and medium-sized enterprises (SMEs) get the finance that they need to expand. Currently, it is difficult for most small firms to borrow from banks.
There are alternatives such as invoice financing, asset financing and peer to peer loans, but many business owners are not aware of them and do not know how to access such capital. At DJB, many of our clients are amazed at just how many different ways they can borrow money, as well as how flexible these alternative lending sources are.
Vince Cable, the Business Secretary, said:
“It’s good that more SMEs are making use of alternative finance but the big banks still dominate and small businesses often give up if they’re turned down for finance by their bank.”
Once firms know where to go to get loans, more UK firms will be able to secure the finance that they need rather than simply giving up. This will mean fewer SMEs going out of business because of what are often short-term cash flow issues.
At DJB, we know from experience that this change will mean that many more enterprises will be able to stay in business and succeed. We specialise in asset based lending and equipment finance, both of which most small firms can use to help them with business cash flow problems.
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