RegStream

The government’s Bank Referral Scheme is designed to help improve SME access to finance and competition in the SME lending market.

Launched in November 2016, the scheme requires 9 of the UK’s biggest banks to pass on the details of small businesses they have turned down for finance to three government designated finance platforms: Alternative Business Funding, Funding Options and Funding Xchange. These platforms are, in turn, required to share their details, in anonymous form, with alternative finance providers, helping to facilitate a conversation between the business and any provider who expresses an interest in supplying finance to them.

The scheme was introduced in response to evidence which shows that SMEs tend to approach their main bank when seeking finance and that, if rejected, many simply give up rather than seek alternative options. As other finance providers with different business models or risk appetites may be more willing to lend to these SMEs, this represents both an informational market failure and a significant barrier to entry for competitors in the SME lending market. The Bank Referral Scheme helps to address this by giving businesses that are viable, but do not fit the risk appetite of a particular lender, greater access to the finance they need to grow and thrive.

Following a recommendation from the Centre for Finance, Innovation and Technology (CFIT), the government brought forward a review of the scheme, which was published in October 2024. Following this review, the government intends to launch a consultation on the future of the scheme by end of Spring 2025.

HM Treasury intends to update these statistics on an annual basis; however, the timing for future releases will be established following the consultation on the scheme.