From next week customers, who the bank is unable to financially help at the moment, will be signposted to both Funding Circle and Assetz Capital as options of alternative sources of finance. RBS accounts for 33% of the small business lending market, so is set to become the largest lender to refer small business customers. As well as this, after having explored Invoice Finance, Asset Finance, the Enterprise Finance Guarantee Scheme and the Regional Growth Fund, customers will be asked to visit the BBA’s dedicated website which also offers additional support.
The bank’s aim is to expand choice for customers whose loan applications do not meet the bank’s criteria, by signposting them to 2-5 peer-to-business lenders (P2B) alongside other alternative finance sources. This will happen through conversations that the customer will have with a relationship manager or through documents included with correspondence.
Crowdfunding is rapidly growing as a means to access finance, and is widely recognised as an alternative source of finance. Peer-to-peer lending to businesses now makes up c. 1% of new UK SME lending, but growing at 200% a year, it is set to become a significant presence in the market in the near term.
The pilot begins next week in Scotland & South-West England; with a national roll-out in Business Banking following over the next 3 months. This move demonstrates how RBS is delivering on the Independent Lending Review commitment to signpost alternative sources of finance.
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.”
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.”
Andrew Holgate, MD of Assetz Capital, commented: “In the not very distant past, it would have been unthinkable for even a leading peer to peer lender to collaborate with a bank. However, it is clear that there’s a genuine desire emerging for banks to support SMEs more by introducing alternative lending industry options. We are proud to be working with RBS at the vanguard of this change and expect to deploy hundreds of millions of pounds at least over the next couple of years into great British businesses.”