The government are pushing ahead with a new landmark legislation that forces high street banks to refer small businesses to alternative lending.
George Osborne and Vince Cable are implementing the plans to bring in the new laws, despite intense opposition from high street banks.
Why Alternative lending is the way forward
The new rules would force the banks to automatically refer customers that they had turned down for credit to alternative lenders. This compulsory law is being fiercely opposed by the banks.
But it’s certainly good news for small businesses who would then be given alternative choices to seek the alternative lending they need.
“All too often, small businesses approach their bank for finance or a small term business loan and are refused, not by any fault of their own but because the banks are still not in a comfortable position to lend freely. There are however many alternative lenders who have some fantastic alternative lending solutions. Take for example a merchant cash advance whereby the loan is repaid on future credit card sales thus having no APR and comfortable repayment percentages, or crowfunding websites where many businesses are finding the finance they need”
“The Treasury is determined to boost the number of alternative lenders in the market.”
In his Budget in March, the Chancellor said he was investigating the idea of imposing a mandatory demand on banks to recommend alternative lending providers to customers.