The British government recently announced plans for a scheme that would require banks that turn small and medium-sized enterprises (SMEs) down for a loan to refer them to an alternative finance provider.

The initiative is designed to make it easier for growing companies in the UK to secure finance. It is reportedly necessary because so many large financial institutions have scaled back the amount that they lend to businesses in recent times.

Numerous studies have shown that this tendency to turn down loan applications is making it hard for many SMEs to expand. Without relatively easy access to capital, firms are unable to invest in new equipment, premises and staff development.

Andrew Van Der Lehm, who is the managing director of the British Business Bank, made the following comment to Reuters:

“We will definitely want to have something in place by 2016. The banks need to implement it and we need to get the systems right. It’s better that the system is implemented well than we rush it.”

Under the scheme, ten of the UK’s major banks will be required to refer any companies that they reject to an alternative loan provider.

At DJB, we have helped numerous firms to use their assets to secure loans and do so quickly. If you would like to find out more about asset financing and the alternative funding methods that you can use to grow your business, please give us a ring or send our team an email.

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