Calls to implement CMA recommendations to unlock SME access to funding
22 October 2015
Recommendations published today by the Competition and Markets Authority (CMA) on bank lending to SMEs should be introduced to help bridge the small business funding gap, says Funding Options, the online business finance supermarket.
Funding Options explains that one of the five key recommendations from the CMA report is to improve "sharing of information with credit reference agencies, banks and financial advisers" which will make it easier for "SMEs to shop around for loans and cut out the need for multiple application form filling".
It says that this recommendation should be implemented immediately to increase small businesses' access to working capital, which Funding Options says has been hit by the banks cutting SME business overdrafts by £5 million each and every day since 2011.*
It adds that the ability to apply to multiple lenders simultaneously is one of the key attractions of alternative finance, where small businesses can apply for numerous types of finance through platforms like Funding Options.
Conrad Ford, CEO of Funding Options, explains:
"A single-application service for small businesses seeking finance would make a huge difference for small businesses. How many of them have the senior management time to spend days filling in numerous virtually-identical forms?"
"What the CMA report doesn’t refer to is the large number of alternative finance providers and online platforms that are offering innovative, competitive and efficient products through simple online applications."
"It is possible to apply for funding to multiple alternative lenders with just one online application. This is not currently an option for SMEs seeking finance from the banks but the capability already exists in online business finance supermarkets like Funding Options."
Funding Options adds that plans for the Government’s SME finance referral scheme are being finalised, and this should lead to a substantial boost in SME finance, with the impact magnified if banks are encouraged to market it effectively.
Under the Bank Referral Scheme, high street banks will offer any small business whose loan application they have rejected a referral to designated online finance platforms, which will put the businesses’ needs to a panel of alternative funders.
* Based on Bank of England figures.