The radical suggestion follows the end of a consultation process (25 April) initiated by the government earlier this year, on whether legislation should be introduced telling banks to match SMEs that have been rejected for loans, with alternative finance providers who are looking to offer finance.
In its submission to the consultation, the alternativebusinessfunding (ABF) group proposed that the Government outsources the management of its platform to a non-bank independent organisation to ensure its neutrality (funded by a membership fee levied on members of ABF). The ABF platform would be used to match bank-referred SMEs with funders, ensuring a viable solution is in place for Britain’s SMEs and the banks, in the fastest possible timeframe.
Adam Tavener, chairman of pensionledfunding.com and catalyst for the ABF non-bank funding collaboration, said: “We are delighted with the feedback we have been getting throughout this consultation process. It seems that both the relevant government departments and our peers recognise the effectiveness of the ABF portal in guiding an SME owner quickly and simply to a likely source of finance, without cost, bias or risk.”
Louise Beaumont of Platform Black, said: “We also recognise the need for swift action on improving access to finance for this vital economic sector and acknowledge the government’s determination to get something done, and fast. Our submission therefore includes the offer of placing the ABF portal under a neutral and independent management structure, so that it can be easily adopted and expanded to form the basis of the private sector platform solution to this problem.
“Effectively the hard work has already been done and functionality has been demonstrated as we are already cross-referring between the participants.”
The government consultation, proposed by the Chancellor in the March Budget, also questions the mechanics of delivering such a measure if the government decided to legislate, and sets out the government’s preferred approach of requiring banks to refer details of SMEs that have been rejected for loans to a platform or platforms, so that they can be accessed by providers of alternative finance.
The alternativebusinessfunding.co.uk portal is already rapidly expanding, with the announcement of the inclusion of an eighth funder.
SMEs looking for alternative business funding on the portal will now be able to access an angel investment option via ANGELS DEN.
The founding participants (Funding Circle, Market Invoice, Zopa, Platform Black, pensionledfunding.com, Seedrs and CrowdCube) already cover 85% of the alternative business funding market *and the addition of Angels Den broadens the range of funding options on offer through the portal. Angels Den was launched in April 2007 and is the leading angel funding site with over £16m of business lending to date.
CEO Bill Morrow said: “We are delighted to join the portal. It’s already been a great success and Angels Den will provide another option for SMEs that are excluded or rejected from traditional bank funding.”