Where to Go When Barclay’s New App Says 'No'?
With so many high street bank branches closing across the region, why was I surprised to learn of one of the biggest launching an instant mobile loans service that it claims is capable of providing instant loans and overdrafts to small firms?
Of course, any steps taken to encourage sustainable growth amongst the legion of small businesses across the UK is welcome. SMEs, after-all, make up to 99.9% of all private businesses in the UK, 60% of private sector employment and 47% of private sector turnover. However, the pre-assessed lending model this app is built on, will continue to say ‘No’ to the 49% of SMEs with a worse than average credit rating, plus those very new and very small startups with no credit history or trading record that turn to Responsible Finance Providers (RFP) Like Foundation East. Even worse, the app just creates another barrier to finance for those that are unsuitable for the mainstream, as there isn’t a referral system in place, or even a place for rejections to be recorded.
Referral is a massive issue, and one that Responsible Finance is working on with the British Bankers Association, the latest development being referral portals. Referral portals are a great idea, but many of us in the RFP sector are questioning how they will become a great reality unless a mandatory obligation for their usage is put in place.
Consider this: in 2015 RFPs, like Foundation East, lent £98m to 11,440 SMEs, 86% of which had been turned down by a high street bank. Of those 11,440 SMEs, many went on to pay back their loan in full, enabling them to meet the requirements of high street banks for future loan applications. You can read about some of them here.
RFPs will be here for those SMEs that get rejected by Barclay’s app, whether they automatically refer them to us or not. Wouldn’t it be great though, if Barclay’s actually showed some responsibility and built in an automatic referral system for those they do turn away?
If we agree that their business plan is viable, not only will approve loan applications, we will also provide expert feedback on the business plan and ongoing support throughout the term of the loan. RFPs, you see, are all about building stronger local economies, working together to deliver a future where fair finance is available to all. We’re responsible, we’re fair, we’re personal and we’re trusted.
These values may mean that we are unable to approve a loan in an hour. We can though, typically, do so within 6 weeks. Our clients appreciate the support they get with this way of doing things. And so, ultimately, do high street banks, because, as explained earlier, by the end of the loan, our clients are investment ready. They have the credit rating and trading history that Barclay’s app bases its decision on, so that Barclay’s, and other banks, will say ‘Yes.’
If you, like us, believe in truly fair finance for all, please share this post via Linked In and Twitter. You, or your organisation, could also become a member of the growing Fair Finance Movement by joining Foundation East, or your local RFP. Doing so will enable your local economy to grow and help entrepreneurs in your region to make their dream a reality in 2017.