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UK-based alternative lenders' access to BoE's fund scheme blocked by incumbents

Tuesday 14 July 2020 13:50 CET | News

HM Treasury has told non-bank lenders dishing out government-backed loans that they won’t have access to finance from the Bank of England, according to altfi.com. 

Following lobbying from industry figures, such as Innovate Finance, the government was consulting on whether or not it would allow incumbent banks to pass on cheap finance to accredited non-bank lenders, a move which it has now rejected. Despite BoE denying non-bank lenders access to cheaper finance, the British Business Bank is reportedly trying to encourage investors to provide alternative lenders with cash by assigning the 100% guarantees to third parties. 

Currently, the 100% government-backed Bounce Back Loan Scheme has a fixed interest rate of 2.5%, but some alternative lenders have struggled to amass enough capital to lend out to SMEs. The move means that many SMEs that had been rejected for funding by traditional banks, will have had their hopes for fresh fintech loans dashed as alternative lenders look to access more funding. 

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Keywords: UK, alternative lenders, BoE, Bank of England, incumbents, HM Treasury, non-bank lenders, government-backed loans, British Business Bank, fintech loans, fintech
Categories: Banking & Fintech | Payments General
Countries: United Kingdom
This article is part of category

Banking & Fintech