How could the new bank referral scheme benefit my business?

Daniel Owen-Parr, national development director at Together explains more about a new scheme that means mainstream banks that turn down a finance application from a small business must refer the company to alternative finance providers.

In November last year, following an addition to the Small Business, Enterprise and Employment Act 2015, a new bank referral scheme was introduced in the UK, and it is set to revolutionise the opportunities for SMEs in the UK this year.

The scheme means that mainstream banks that turn down a finance application from a small business must refer the company to alternative finance providers. Given that it was estimated by the British Business Bank that over 100,000 SMEs are turned down for a bank loan every year, representing a possible funding gap in the UK of £4 billion, there was clearly a need in the market for this type of process.

Research conducted by ourselves at Together echoed that of the British Business Bank, as we found that there is a general lack of awareness amongst SMEs of the alternative funding channels available.

Many SMEs apply directly with their bank when they require funding; but previously if the application was refused, no guidance as to other options a business could explore had to be provided. Therefore, businesses with little time or resource to conduct further research into funding options would instead halt their growth plans.

Now, however, in a boost for British businesses, the scheme will signpost customers to apply directly to alternative lenders, or rely on a referral from their relationship manager. All the major high street banks must participate in the scheme, and as well as the preferred platforms given by the Treasury, banks are also being encouraged to form their own panels of alternative lenders to work with.

As an advocate of the scheme, at Together we are already working with Natwest and RBS and are a confirmed member of their Capital Connections referral panel. We are also working with Funding Options, one of the three companies chosen by the Government as an official partner of the scheme, and sit on its panel of specialist lenders.

We’re delighted to be working with several major partners and banks in response to the new scheme, and it very much helps us to achieve our adopting a common sense approach to provide fast and flexible funding, serving those that may not meet the criteria set out by mainstream banks.  

The specialist lending market has grown rapidly in popularity over the years and this scheme benchmarks a shift in attitude towards borrowing from places other than a mainstream bank. In today’s setting, a bank declining a finance application isn’t the end of the road. Now the bank referral scheme is in place, we’re hoping to see the SME market in the UK flourish as a result.

We’re not the only ones either - research from the Centre for Economics and Business Research (CEBR) found that SMEs are expected to deliver £217bn to the UK economy by 2020, an 11 per cent increase on the current contribution delivered by small business sector and a timely reminder of the important role that these businesses play.

At Together, we’re also hoping to increase the number of partnerships we have in this space in order to reach even more SMEs.

Together is a specialist lender with over forty years’ experience in the financial services industry. It offers a wide range of finance including short-term finance, auction finance, buy-to-let, residential and commercial mortgages and secured loans. Visit for more information.