According to statistics published by an independent external reviewer, small businesses across the UK have secured £5 million in bank funding after appealing against decisions made by banks during the last quarter.
The report, published by Professor Russel Griggs, says the overall additional funding secured through the scheme now totals £46.5m. Professor Griggs studies the loans appeals system every quarter and looks at how many SMEs appealed against a decision to reject their loan application. He also offers small businesses with an annual turnover of less than £25m an independent service to which they can appeal if their bank turns them down for credit.
His latest report revealed that 965 small businesses challenged their banks during April-June, 2014, and the total number of appeals is now just under 10,000. The report went on to say that one in four businesses were successful in overturning their bank’s decision, which, in other words, means that the banks had made the wrong decision.
Professor Griggs said he and his team were “committed to improving the dialogue between banks and their customers”.
I have now started a discussion with all the banks to try to establish, where needed, a common vocabulary where appropriate across all banks for SME lending, as part of this commitment to improve conversations and understanding between banks and small businesses.
The three months to June have shown again that the banks are now using the appeals process to continually assess and look at their decision systems. It is clear how the appeals process has become a positive driver of change and is making a real impact on the lending process for SMEs.
The report further said that failed credit scoring was the most common reason for the rejection of the loan applications, and accounted for 36% of the refusals. Despite of that, banks are stepping up their efforts to make sure businesses understand the importance of a healthy credit rating.
Banks like Barclays, Lloyds Bank, Bank of Scotland, HSBC, RBS, NatWest, Santander, TSB, Ulster Bank, Bank of Ireland, Danske Bank, First Trust Bank and Clydesdale Bank are all participating in the appeals process.