Alternative funders launch SME finance portal

Seven of the country’s major alternative funders have launched a web portal designed to signpost SMEs to the most appropriate source of non-bank funding, providing a short-cut to finance options that business owners may not be fully aware of.

In addition, each organisation will “recycle” their rejected applicants to the site to access other potential non-bank funding sources.

Collectively, CrowdCube, Funding Circle, Market Invoice, Platform Black, Seedrs, Zopa and account for 85% of the alternative non-bank funding market and have provided to date more than £580m to SMEs, supporting around 80,000 jobs.

The new portal is just the starting point of a campaign to create a more collaborative environment for business funding, aimed at simplifying SME owners’ search for finance to help support their businesses, while providing a place for the major banks to redirect customers who don’t meet their criteria.

This will be a much needed boost after the latest Bank of England figures showed a further drop of £0.3bn in small business lending in January this year.

The latest SME Finance Monitor research shows that 45% of bank loan applications fail.

The associated businesses behind the portal are intent on lobbying government to meet the recommendations of the Breedon Report, which called for clearer ‘signposting’ for unsuccessful bank applicants to find alternative funding sources.

Based on the latest research this could result in more than 250,000 businesses being directed to the site.

The idea of a collaborative approach to funding was floated at the “Innovators in Finance Summit” meeting at 10 Downing Street last year.

By providing alternatives such as crowd-funding, invoice financing, peer-to-peer lending and pension-led funding, most business funding options are met by the new portal, regardless of length of the finance period or whether it is based on share of equity or self-investment. Other alternative funders are set to join the portal after the initial launch.

Matthew Fell, CBI director for competitive markets, said: “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.

“So it’s really encouraging to see some of the leading providers getting together to raise awareness of their products by launching a new one-stop-shop website.”

Businesses seeking alternative finance answer a few simple questions online about their company funding requirements and are signposted to only those funding options that can meet the potential requirements of the business, using a creative new approach - an at-a-glance red-amber-green traffic light system.

Funders’ contact details are provided and a simple explanation of each funding option is also provided.

The portal is not competitive, as there is no cost to funders who join it, and no personal contact details from the business owners are requested so they can use the site in confidence as many times as they want.

Adam Tavener, chairman, and catalyst for the site said: “'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.”

James Meekings, co-founder of Funding Circle, the online marketplace for business loans, added: “All of the platforms involved in the portal are determined to significantly enhance the availability, clarity and quality of new finance solutions to both small businesses 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.”