How will new bank rules support small business funding?

The British government is looking to shake-up the business loans market by introducing new legislation insisting that banks inform rejected would-be borrowers of alternative options available online.

But how might the potential changes help small businesses in finding the funding they need?

Healthier competition

If banks do change their policies and start recommending online sources of alternative funding to all their rejected customers then the impact on small business lending could and should be quite dramatic.

A variety of online finance providers should, as a direct result, find their services suddenly much more in demand, which should in time lead to a much more competitive SME loan market being established across the country.

As it stands, the market for SME loans is widely recognised as being damagingly uncompetitive, with big banks continuing to dominate the sector, despite generally being very reluctant to lend.

Read more at Real Business

Source;Real Business 11/08/2014