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11 Mar 2014 05:43pm

New SME finance portal launched

A group of non-bank funders have created a one-stop shop for SMEs interested in accessing finance

On the day it was announced there would be a more detailed investigation into lending to small businesses on the part of the main high street banks, seven of the leading alternative finance providers have come together to launch a new one-stop portal for SMEs interested in accessing finance through a non-traditional channel. The brainchild of Adam Tavener, chairman of pension-led funding business Clifton Asset Management (and pensionledfunding.com) the new website, alternativebusinessfunding.co.uk, includes such luminaries of the alternative finance market place as FundingCircle, Zopa, MarketInvoice, PlatfiormBlack, Seedrs and Crowdcube. Between them the seven founder firms account for 85% of the sector.

Speaking at the launch, Tavener explained that the idea for the new portal was first raised in Tim Breedon’s report Boosting Finance Options for Business, launched at Chartered Accountants’ Hall in March 2012.

One of Breedon’s recommendations was a mechanism to signpost SMEs recently rejected by banks for lending to possible sources of non-bank lending. The problem, said Tavener, was that this would have created potential regulatory risk for the banks.

Effectively alternativebusinessfunding.co.uk offers that signposting service to SMEs allowing banks to refer businesses they can’t support (or can’t support fully) to a more suitable source of funding. The seven providers themselves will also feed businesses they deem unsuitable for their own platforms back into the site to see if there is a different alternative finance option that may be more suitable.

An estimated 250,000 businesses have an application for some form of funding from a bank turned down every year. Speaking at the launch, James Meeking co-founder of Funding Circle, was critical of the UK banking system.

“The whole concept of the banks is fundamentally flawed. How good is the advice you are going to get from a product-pushing relationship manager at a bank? Switching banks is still very tricky.”

Louise Beaumont, founder of invoice finance firm Platform Black, added that she hoped to see a more “blended service” in which the banks worked with alternative sources of finance. But, she added, the evidence to date was that smaller, challenger banks such as MetroBank were more likely to think and act in this way.

Anil Stoker, founder of Market Invoice and contributor to the economia blog, highlighted that a common problem for the entire sector had been a lack of awareness. “There is still a perception that banks are the first port of call for lending. Awareness if the biggest barrier we all face and together we’re stronger.”

Richard Cree

 

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