Start-ups seeing 50% rejection rate from traditional banks
Small and medium-sized enterprises (SMEs) are still struggling to borrow, and recent research shows that start-ups (defined as less than five years old) are seeing a 50% rejection rate from traditional banks, financial services company business finance company, Verus360, has said.
While the UK’s alternative finance sector is stepping up to help businesses plug the gap, Verus360 says the lack of awareness of alternative sources of SME credit among businesses and their accountants could cost the economy up to £20bn by 2020, as traditional lenders subject SMEs to opaque fee structures and withdraw crucial funding lines.
Like Minds is holding a panel debate in London on Thursday 5th May to give business owners and accountants a chance to share their views and find out more about how the sector works and how it could help them.
To investigate the scale of the problem a journalist for local business magazine, TopicUK, recently contacted six of banks lending to SMEs in the UK with a question: How much would they charge to lend or provide an overdraft to a notional company with specific borrowing needs? TopicUK stated that not one bank was able to provide figures, or even estimates, in response to this inquiry. Alternative finance providers usually take a different approach and pride themselves on their transparency around fees.
Verus360 CEO, Tony Morgan, who will be taking part in the panel debate, commented on the investigation: “With the information provided in the journalist’s case study we would have provided a clear and rapid answer on pricing and rates. Kicking the can along the road which, as this exercise demonstrates the big banks consistently do, is simply not good enough for UK plc. This is why SMEs are turning to agile alternative finance lenders.”
The panel debate: “Alternative Finance & Are the Banks Dead to You?” will take place on Thursday 5 May 2016 and is hosted by Like Minds.
Panellists include Tony Morgan, CEO of Verus360; Henry Freeman, CEO of Crowdshed; and Malcolm Durham, founder of Wealth Being, moderated by FT journalist, Andrew Davis. Find out more and book tickets at www.wearelikeminds.com.