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Establishing Finance Platforms to increase financing opportunities for smaller businesses
Objective of Small and Medium Sized Business (Finance Platforms) Regulations 2015 (.pdf - 138kb)
From 1 November 2016, if a small business is rejected for finance by the big banks they are now obliged to offer the business a referral to a designated, online finance platform. These platforms give alternative finance providers the opportunity to offer viable businesses the finance they need.
Designated banks now need to offer any SME they decline for finance the opportunity for their details to be referred to a designated platform. These platforms will help match the SME with alternative finance provider that could provide them with the finance they need to grow and expand.
The process for applications from Finance Platforms to apply for designation is currently closed.
The Asset-based Finance Association (ABFA) has also published its own guide to the regulations and how they relate to invoice finance, which is downloadable from the ABFA website.
General Q&A
What is the designation process for platforms?
HM Treasury (HMT) have the power of designation based on advice provided by the British Business Bank, who undertake a process of due diligence.
Could more platforms or banks be designated in future?
Yes. Under the Regulations additional platforms and banks may be designated. Also existing platforms and banks could lose their designation.
What financial arrangements exist between a platform and lenders?
Platforms are commercial enterprises and need to generate income from the service they provide. This can be achieved in a number of ways such as by charging lenders to be included on the platform or by fees charged based on funding provided. Businesses will not be charged to use platforms.
Where can I go to find further information?
You can find more information about the platforms and the referral process on the UK Finance website.
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