Does the Bank Referral Scheme WorkBack in 2015 the government started putting the wheels in motion regarding a bank decline designation scheme. The scheme referred to as the Bank Decline Scheme aims to find SMEs finance who have been declined by the mainstream banks. Much has been written about its failings but at Pinnacle Business Finance we actually adopt a different view. In fact the biggest failing seems to be in the ability to reach SMEs, something we often find. The average SME needs to be more ambitious when accessing commercial finance.

Much has been made of the fact that 670 businesses obtained commercial finance out of a possible c.14,000 enquires In actual fact the scheme only manages to reach 10% of these, which the government report accepts is industry average. What is staggering is that of the 10% that are reached, they stand nearly a 50% chance in actually getting funding. The bank decline scheme therefore seems to be working. Both these stats don’t surprise our team here in Bristol. It points to a wider issue where SMEs are largely unwilling to engage with the lenders.

The bank decline scheme is focused on using platforms from the three providers Alternative Business Funding, Funding Options and Funding Xchange. All these platforms focus on pushing SMEs to lenders as quickly as possible. The focus on quick algorithms means many don’t respond as they are left with an irrelevant pool of lenders. At Pinnacle Business Finance we guide each SME through the process and fully understand each business. We then select the lender or lenders, this way it is an effective process.

We have a lot of respect for Funding Options, but we feel very much a local finance broker is key. At Pinnacle Business Finance we often visit SMEs especially our clients located in Bristol. In stark contract to the likes of Funding Options who take clients down a platform driven route. This lack of human interaction can be challenging for SMEs who often do business face to face. The vast majority of our lenders reflect our face to face approach.

On balance, we at Pinnacle Business Finance, find the articles written about the success of the platforms unfair. They provide a solution where one did not exist and provide a basic solution for SMEs who would otherwise not be able to access finance. The underlying reason they end up going though the likes of Funding Options is because they have chosen not to source a commercial finance broker. If an SME was more ambitious they would look for an ambitious commercial finance broker to support their finance needs. This is where Pinnacle Business Finance comes in. We actively seek and work with ambitious SMEs who want the best the market has to offer.

In conclusion the scheme works for those who engage with it. It is a fair reflection of perception and reality. Most SMEs do not perceive the commercial finance market as positive, even though there are many options available. The likes of Funding Options offer a contrasting approach to us in Bristol. There is room for both, it should be seen as progressive and not competitive.