SME lender welcomes lending review

Fleximize believes that one of the key reasons behind why more people from this background do not set up businesses is because they are finding it increasingly difficult to secure funding from banks, and are discouraged from looking at alternatives. For example, over 60% of Fleximize’s business loan customers have been previously rejected by their banks.

Recent Fleximize research revealed that between January and March this year, banks rejected credit applications from SMEs, including loan and overdraft facilities, worth an estimated £1.36 billion. This was around 23% higher than the £1.1 billion of SME credit applications rejected in Q1 2014 and 0.7% up on the previous quarter (Q4 2014).

Max Chmyshuk, Founder and Managing Partner at Fleximize, said:  

“Banks are battling with a lot of issues at the moment. Aspects of their cost structure and risk management systems are unfavourable towards the SME lending market, particularly early stage businesses. In many instances, banks would rather lend to consumers on the back of their salaries, or to large corporates who have long performance track records and strong asset bases. This makes it harder for talented entrepreneurs from less advantaged backgrounds to break out of the vicious cycle and secure funding for their young businesses.   

“Alternative funders are actively filling the void by building better risk models and looking for early indicators of future success beyond an individual’s credit score. Fleximize, for example, developed its own unique credit-scoring model that, alongside traditional credit score, incorporates numerous third-party data that a regular bank would disregard. This gives us a more holistic assessment of a business and ultimately allows us to fund many companies that could not get a bank loan.

“I believe supporting the alternative finance market and educating prospective entrepreneurs on the alternatives to bank funding should be a priority for any government initiative aimed at helping SMEs.”