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The law requires banks to pass on details of small and mid-sized businesses that they decline for a loan to online platforms which can help match them with alternative finance providers. This is, of course, with the firm's permission.
But Sacha Bright, from crowdfunding aggregator, BusinessAgent, thinks that some of the the banks are not sufficient prepared.
He said: "We are in a situation where, according to Government figures, first-time SME borrowers face a 50 per cent rejection rate. Many of these businesses are high growth SMEs operating in a knowledge based economy and the traditional banks are ill-equipped to help them.
"There are alternatives out there for these businesses, but despite rapid growth in the Alternative Finance market, there is still a significant lack of awareness. This will only be accelerated by effective signposting from the places where businesses still tend to go first - their bank"
The Alternative Finance market provided £1.2bn to businesses last year and although this represents 214 per cent year-on-year growth, it is still only about 2 per cent of annual UK business lending.
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Susie Hughes © Shout99 2015
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