Seven of the UK’s leading providers of alternative finance have come together to launch a finance portal for small and medium business financing. The new portal is designed to signpost SMEs to the best sources of non-banking finance and also to provide finance options that they might not have been previously aware of.
CrowdCube, Funding Circle, Market Invoice, Platform Black, Seedrs, Zopa and Pensionledfunding.com collectively account for 85% of the non-bank finance market and have to date provided £580m to small and medium enterprises, supporting a reported 80,000 jobs as a result.
The businesses behind the portal are keen on lobbying government support to meet the suggestions of the Breedon report which calls for better signposting for unsuccessful bank applicants to find alternative sources of finance.
The launch, which comes only two months after Bank of England figures showed lending to small businesses had dropped by £0.3 billion in January this year, has won praise from Matthew Fell, Confederation of British Industry (CBI) director for competitive markets. He says, 'There are lots of innovative alternative finance products on the market in the UK for growing firms but the simple fact is that most businesses aren’t aware of what’s available, or how to get hold of it.’
The web portal is the brainchild of Adam Tavener, chairman of pensionledfunding.com, and according to him is “complementary” to bank finance. He added: “We see this portal as a genuinely disruptive influence, as it will shake up the SME finance sector and drive the current inefficiencies from the system.”
The businesses behind the portal hope that banks that are reluctant to lend will redirect businesses in their direction.
James Meekings, co-founder of Funding Circle, said: “All of the funders involved in the portal are determined to significantly enhance the availability, clarity and quality of alternative funding solutions to both SME’s and major Banks wanting to refer unsuccessful applicants. This forms part of our wider commitment to providing fair, fast and transparent access to finance to as many small businesses as possible.”
How would it work? To get started businesses that want alternative means of funding would have to answer a few simple questions about their requirements and will then be signposted to only those funding options that meet their requirements.
The idea has won praise from business secretary Vince Cable, who said, “A new alternative business funding portal that seven funding bodies put together will enable redirection of customers. Anything that redirects people, who are turned down by one lender, is an advance.”