Small businesses raise millions through Bank Referral Scheme, figures show

More than 1,700 businesses have been granted alternative finance options through the Bank Referral Scheme (BRS) after being turned down for traditional business loans, new figures reveal.

The statistics come after a period of solid growth of the scheme, which saw funding increase by over a third in the last year.

In total, 796 businesses raised nearly £17 million in funding over the past 12 months alone, compared to a total of 1,700 businesses raising £32 million since the scheme was launched in November 2016.

The average loan size also increased from £17,285 in 2017/18 to £19,399 in 2018/19.

The scheme was first introduced after research revealed that finance was a major obstacle to growth among small and medium-sized businesses.

In fact, the most recent figures suggest that one in two (49 per cent) businesses are forced to put their investment plans on hold, or cancel them altogether, if they fail to secure the full amount of finance required.

Under the BRS scheme, the top nine banks and building societies must pass on the details of businesses who have been turned down for traditional loans to alternative finance providers who specialise in high-risk business loans, such as revolving credit, asset finance and invoice finance.

Commenting on the figures, the Economic Secretary to the Treasury, John Glen, said: “It’s not right that so many small and medium-sized businesses simply had to give up when they were turned down by their bank for a loan.

“I now want to see more of our trailblazers and entrepreneurs use this scheme to get the backing they need to grow and help boost our economy.”

Managing Director for Strategy, Economics and Business Development at the British Business Bank, Alice Hu-Wagner, added: “One of the British Business Bank’s key objectives is to encourage and enable smaller UK businesses to seek the finance best suited to their needs. We’ve seen the value of lending through the government’s Bank Referral Scheme increase by a third over the last year, which points to its growing use amongst smaller businesses.”

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