Bank Referral Scheme and broker relationships: Bridging the gap for SMEs
Bank Referral Scheme and broker relationships: Bridging the gap for SMEs
The Bank Referral Scheme was launched by the government in November 2016, and as of Q3 2024 had facilitated 5,387 deals totalling £128 million in finance for SMEs.
It was intended to make it easier for SMEs to access alternative finance, should they be declined by their bank when applying for financial support.
However, many small and medium business owners either do not know about the scheme or apply and are declined due to not addressing credit profile issues that they are often not even aware of.
An NACFB Member survey of 7,000 SMEs found that half of those businesses declined by alternative lenders after referral were declined due to issues that could be easily resolved, including late filings, missed payments, or overuse of overdrafts to secure funding.
Ian Adams, BDM and director at Bathgate Business Finance, said: “The Bank Referral Scheme exists to help provide businesses with a solution, but the results demonstrate the need for other external support to both help prepare business for finance applications and direct them to a funder that meets their specific circumstances and needs.
“Where they do apply via the scheme and are declined, it is usually due to issues that could have been resolved with the right guidance and advice. This is where talking to a broker can make an enormous difference and bridge the gap between referral and securing finance.
“A broker can also look at your business and finances as a whole, identify those potential issues and help you to put a strategy in place, including working with your solicitor, accountant or other professionals, to resolve them before making an application. This provides both an immediate finance solution and funding to meet future plans.
“This will decrease the risk of being declined again by alternative lenders and could help to secure finance that will be transformative for your business. The NACFB recently advocated for more relationship-led approaches with brokers to help referred SME owners engage effectively with the scheme, and as members we fully support that.
“Relationship-led is how Bathgate has always done business, and it has allowed us to always help our clients to identify challenges they might not even be aware of and find the best possible solutions for their business needs.”
To discuss the Bank Referral Scheme or your wider business finance needs with Ian, please contact ian@bathgatebf.co.uk or call 078 8018 6846