Move recognises alternative finance

Royal Bank of Scotland in tie-up with peer-to-peer funders

RBSRoyal Bank of Scotland is to run a pilot partnership north of the border with online peer-to-peer platforms in a significant sign of mainstream banking’s recognition of the alternative financing market.

Funding Circle and Assetz Capital will provide the bank with access to a growing sector of the lending community which includes crowdfunding and asset finance.

RBS, which has come in for criticism over its relationship with smaller firms and chief executive Ross McEwan believes this is a route to rebuilding support with a key customer base.

The bank, together with subsidiary NatWest, is launching eight business accelerator hubs around the country to provide small firms with free workspace, hands-on mentoring and a programme of advice and support.

From next week customers unable to get a loan from the bank will be referred to Funding Circle and Assetz Capital as options of alternative sources of finance.

RBS accounts for 33% of the small business lending market, and is set to become the largest lender to refer small business customers. The bank said it considered invoice finance, asset finance, the Enterprise Finance Guarantee Scheme and the Regional Growth Fund, and is referring customers to the BBA’s dedicated website.

The bank says crowdfunding is rapidly growing as a means to access finance, and is widely recognised as an alternative source of finance. Peer-to-peer lending to businesses now makes up about 1% of new UK SME lending, but growing at 200% a year, it is set to become a significant presence in the market in the near term.

The pilot begins next week in Scotland & South-West England; with a national roll-out in business banking following over the next three months. This move demonstrates how RBS is delivering on the Independent Lending Review commitment to signpost alternative sources of finance.

Gordon Merrylees, head of entrepreneurship RBS and NatWest, said: “We are committed to doing the right thing for our customers. We recognise that having an in-depth knowledge on more appropriate sources of finance in order to signpost our customers is essential. I am delighted to see RBS partnering up with both Funding Circle and Assetz Capital. We are dedicated to supporting SMEs, whether they are an existing customer of RBS or not.”

Chancellor George Osborne said: “A key part of our long term economic plan is to ensure that British businesses are able to access the finance they need to grow and succeed. And it’s only through harnessing innovations in finance, alongside our existing world class knowledge and skills in financial services, that we’ll ensure Britain’s financial sector continues to meet the diverse needs of businesses here.

“That is why I announced a further package of measures to support peer-to-peer platforms at last month’s Autumn Statement, including a new bad debt relief to create a level-playing field for the industry. It is great to see companies like Funding Circle forging a new partnership with RBS to ensure that small British companies have the best access to funding.”

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