The new bank referral scheme seems to be in favour with SMEs according to research conducted by alternative lender Liberis.
The new survey that quizzed 1000 people revealed that 85% believe the new scheme is the key to the future success of the small business sector.
The revenue-based finance platform also found out that 63% of respondents feel that it will lead to more businesses getting funding and 45% think it will create a more competitive SME funding marketplace.
The new scheme that looks set to come into place next year, is headed by the British Business Bank (BBB), is forcing ten of the top banks to refer SMEs to alternative finance providers if they are unable to accept loan applications.
Keith Morgan, CEO of the BBB, commenting previously said:
"Smaller business will have a greater choice of provider and chance of securing finance, alternative finance providers will have access to a bigger market of potential clients, and the major banks will be able to offer an additional service to those they initially turn down."
The 10 financial institutions that will be required to provide referrals are: RBS, Barclays, Lloyds Banking Group, HSBC, Santander, Clydesdale Bank, Yorkshire Bank, Bank of Ireland, Allied Irish Bank and Danske Bank.
Along with its partners, the BBB has helped facilitate £1.8 billion of funding to more than 43,000 small businesses across the country and Morgan expects that to rise to £10 billion within the next five years.
However, the new research, by Liberis, has discovered that 48% of respondents think the new law will make funding more expensive for businesses, whilst 37% think it will effect cheaper funding. Other perceived benefits by the majority of SMEs are easier and quicker access to funding and that more businesses will grow.
Paul Mildenstein, CEO of Liberis said:
“A great deal has been accomplished lately towards helping small businesses access funding. It’s crucial that the momentum of this initiative is not derailed or slowed down by any new government, whatever its makeup.
Whilst small businesses need it quickly, the success, or failure, of this scheme will be down to effective implementation of a well thought out process. It must be monitored and measured by the British Business Bank, who must be given the muscle power to make sure everyone collaborates as they should.”