By Farah Khalique
A rejection letter from the bank is no longer the end of the line for NGCs.
One lender's trash is another lender's treasure. Alternative finance providers have put pressure on the government for years to force banks to share information on the customers they reject for financing. The UK government listened, and pushed through the new Small and Medium Sized Business (Credit Information) Regulations 2015, which came into force in April.
High street banks such as Santander, Barclays and RBS will share credit information they hold on small and medium enterprises.
High street banks such as Santander, Barclays and RBS will share credit information they hold on small and medium enterprises with three credit reference agencies - Experian, Equifax and Creditsafe - which will share the data with all finance providers.
One such finance provider that welcomes the moves is The Just Loans Group, a platform that reviews first-stage loan applications in under ten minutes. This gives businesses the chance to secure financing quickly, such as an overdraft, property financing or commercial funding. Its target market is younger companies who may find it difficult to raise funding, and it receives customer referrals from banks, says chief executive John Davies.
"We see a lot of upside with [the new scheme]. It will allow us to see more information that helps us lend to more businesses."
However, it will take time to implement and banks must be careful when sharing sensitive customer data, warns Davies.
"It's quite early days yet and of course there will be people quick off the mark to adopt but [it will] take some time before it becomes fully functional. The provider of data has to [also] make sure data ends up in the right hands."
Farah Khalique is a freelance business and financial journalist, with a keen interest in writing about non-bank financing solutions that can help SMEs grow their business. She has written extensively about banking scandals and has made TV appearances on Sky News and The Wall Street Journal Live to comment on topical issues including money laundering and bankers’ bonuses. Follow her on Twitter.