There are many small businesses that have been rejected loans by the banks and this can often cause problems for these businesses but the industry has recently made an attempt to make accessing these loans a lot easier. The Royal Banks of Scotland has linked up with two peer-to-peer lenders to offer alternative loans to the smaller companies.
There has been a report that has stated that RBS, who is now the largest lender to offer loans to small businesses plans to refer a large number of these businesses to the lenders- Assetz Capital and Funding Circle. In Scotland and the South West of England, a pilot scheme has been put in place.
The History Of Lending Options
In recent years, to think that a bank would work alongside an alternative lender was unheard of but now the banks are showing support for the small businesses by bringing in the alternative lending which gives small businesses an option. Santander have also put in a place something similar when they linked up with Funding Circle last year and now RBS plan to do the same.
It has come to light that half of all small businesses that apply for a loan are eventually rejected according to the Department for Business. The government has now stepped in to encourage banks to refer those small businesses that have been rejected to these alternative lenders in an attempt to improve lending.
£128 million was leant to small businesses by the largest banks between June and September through the funding and lending scheme. This program consists of cheap loans which are then offered to small businesses and households.
What This Means For You
As it currently stands, from all the businesses loans that are put in place, peer-to-peer lending only makes up 1% but this is an industry that is growing rapidly. Since Funding Circle was incepted in 2011 it has lent £494 million as well as £40million from the Government’s British Business Bank.