Fleximize, an SME lender that launched in January, discovered that 351 SMEs banks should be forced through legislation to provide details of SMEs they have rejected for funding to alternative lenders. This 351 firms equate to 65 per cent of the total number of participants within the survey.
Max Chmyshuk, Founder and Managing Partner at Fleximize said: “It’s ridiculous that so many SMEs have their applications for credit rejected by the big banks because many of them are financially viable, growing businesses that don’t pose a high risk of default.
“They are sometimes unable to persuade the big banks to lend to them because the banks use lending criteria designed for the last century and ignore some positives even when they see them, focusing instead on catching negatives.
He added: “With new technology, data and insight, alternative lenders can often be ‘smarter’ than the banks when assessing applications for business credit.
“The ultimate goal is to increase the amount of responsible lending to SMEs and this will be helped if new legislation forces banks to forward the details of SMEs they reject for finance to professional regulated alternative lenders.”
The research also exposed a lack of understanding from SMEs of the alternative lending sector with over 371 firms admitting their knowledge of the sector was not good or excellent.
Analysis of industry data by Fleximize reveals that around £787 million of business loan applications alone were rejected during the third quarter of 2013. Around 22% of applications from small businesses were rejected, and the corresponding figure for medium sized enterprises was around 9%.
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