RBS has today announced that it is set to give thousands of small British businesses greater access to finance by formally referring customers to Funding Circle and other alternative finance providers.
From next week the bank will refer businesses to Funding Circle for small business loans, where the online marketplace is better placed to help. The high street bank accounts for 33% of the small business lending market, so is set to become the largest lender to refer small business customers.
Funding Circle allows small businesses to borrow directly from investors. To date, more than 7,000 businesses have borrowed £490 million, thanks to a rigorous and proven credit assessment process. Investors are currently lending £35 million per month, making Funding Circle’s marketplace the fourth largest net lender to small businesses in the UK.
This move demonstrates how RBS is leading the industry at a time when the Government is looking at introducing legislation. Funding Circle and RBS have been part of the Treasury’s working group examining how best to encourage greater collaboration between high street banks and alternative finance providers.
Chancellor of the Exchequer, George Osborne said: “A key part of our long term economic plan is to ensure that British businesses are able to access the finance they need to grow and succeed. And it’s only through harnessing innovations in finance, alongside our existing world class knowledge and skills in financial services, that we’ll ensure Britain’s financial sector continues to meet the diverse needs of businesses here.
“That is why I announced a further package of measures to support peer-to-peer platforms at last month’s Autumn Statement, including a new bad debt relief to create a level-playing field for the industry. It is great to see companies like Funding Circle forging a new partnership with RBS to ensure that small British companies have the best access to funding.”
The bank aims to expand choice for customers whose loan applications do not currently meet the bank’s criteria, by signposting them to a number of alternative finance providers. Referrals will take place during conversations that the customer will have with a relationship manager or through documents included with correspondence. The pilot begins next week in Scotland & South-West England; with a national roll-out in Business Banking following over the next 3 months.
Alison Rose, CEO Commercial and Private Banking commented: “We are committed to doing the right thing for our customers by helping them access finance where we cannot help them within our current risk appetite. I am delighted to see RBS partnering up with both Funding Circle and Assetz Capital. We are dedicated to supporting SMEs, whether they are an existing customer of RBS or not.”
Samir Desai, CEO and co-founder of Funding Circle said: “This partnership recognises our role as the largest marketplace for unsecured and secured small business lending. Partnering with the UK’s biggest small business high street lender is a huge vote of confidence in our model, and we look forward to working together to create thousands more opportunities for small businesses to access finance and grow.”
