The boss of a leading challenger lender has warned that a government initiative for funding small businesses is “at risk of failure”.
In a letter to Philip Hammond seen by the Press Association, Iwoca CEO Christoph Rieche said the Bank Referral Scheme (BRS) had “failed to make any meaningful impact”.
“The BRS scheme remains one of the Government’s potentially most transformational initiatives when it comes to making finance available to businesses,” he said.
“However, as with many ambitious targets, it does not come without complexity and more needs to be done to overcome them.”
Under the programme, banks are required to refer businesses which have been denied loans to designated alternative finance platforms.
It was launched in late 2016 with the intention of addressing low levels of funding available to small businesses.
Figures from the Treasury show that 902 loans have been provided through the scheme between its launch and the middle of 2018, taking the total value lent to £15.59 million.
Iwoca said it had provided just over half of these, approving 500 loans during the period.
Mr Rieche said the unfulfilled demand could be met by making some changes to the BRS, and asked for the Chancellor’s support in setting up a taskforce of industry leaders and policymakers to regularly review the programme.
He also proposed introducing a referral fee for banks, using so-called Open Banking technology to reduce admin for businesses, and improving training for bank staff.
“The Government has a huge opportunity to turn the BRS into the success it deserves to be, for the benefit of small businesses across the country, and thereby creating much needed economic growth,” Mr Rieche said.