One business support organisation recently urged business bank account holders to submit an appeal if they have been unfairly denied access to venture capital by their banks.
The Forum of Private Businesses stated that those firms that had been denied business loans now have a new process of which they can avail themselves thanks to the British Bankers’ Association.
The new BBA initiative allows smaller firms to request second opinions if they have reason to believe that they were unfairly declined by their banking provider. The system was the result of a 2010 report from the Business Finance Taskforce. The industry-led taskforce did acknowledge that banks were falling short on credit for small and medium-sized businesses.
Loan refusals can be reviewed by an additional individual at a business customer’s bank if the customer requests it. The new reviewer will not have had any prior involvement in the initial loan decision and a new decision will be given to the business owner within 30 days of their appeal.
In the event that the second application is denied as well, the financial services provider will furnish information to the business customer regarding alternative funding sources under the new appeals process.
Phil Orford, chief executive of the FPB , stated that major banks will finally be required to spell out more explicitly the standards businesses in the UK can expect from them. The Better Business Finance campaign will provide additional support online and an appeals process if business loan providers are considered to not meet these standards, he also said.
The FPB chief executive added that it is particularly important to monitor self-regulating codes of practice. However he remarked that provided lenders adhere to these principles the FPB welcomes the much-needed aim of the initiative to get banking providers to offer better and more affordable lending.