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Matchmaker service to help SMEs get funding

The Government has launched a matchmaking scheme to help small business owners to access funding when they have been turned down by a bank.

Small businesses struggling to access finance from big banks will be matched with alternative finance options under the new scheme.

Nine of the UK's biggest banks will pass on the details of small businesses they have rejected for finance to three finance platforms - Funding Xchange, Business Finance Compared and Funding Options.

These will then share these details with alternative finance providers (with the permission of the small firm) and go on to facilitate a conversation between the business and any provider who expresses an interest in supplying finance to them.

HSBC, RBS, Lloyds, Barclays, Santander, Clydesdale and Yorkshire Bank, Bank of Ireland, Danske Bank and First Trust Bank have signed up to the scheme.

According to the Government, research shows that 71% of businesses seeking finance only ask one lender and, if rejected for finance, many give up rather than seek alternative options.

Last year 324,000 small and medium-sized businesses applied for a loan or overdraft; 26% of these were initially declined by their bank and only 3% of those declined were referred to other sources of help.

Chancellor of the Exchequer Philip Hammond said: 

"A refusal from a big bank should not be the end of the line for a small business and, thanks to the finance platforms being launched today, now it won't be."

Keith Morgan, CEO of the British Business Bank said: 

"This new Government initiative, supported by the British Business Bank, has the potential to make a real difference to smaller business finance markets in the UK."

The matchmaking scheme has been welcomed by the Federation of Small Businesses (FSB). Mike Cherry, FSB National Chairman, said: 

"FSB pushed hard for these reforms, and today's announcement is good news as the Government delivers on them. This change will boost alternative lenders, bringing more competition and choice in the market beyond the big banks."

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