The UK government has launched a scheme which allows companies to be referred to alternative lenders for financing if rejected by traditional lenders.

Launched on 1 November, the HM Treasury-initiated referral scheme brings together banks and alternative lenders, and allows lenders to refer businesses they reject to others that may fund them.

It will require nine of the UK’s largest banks to forward the details of rejected SMEs to finance platforms Funding Xchange, Business Finance Compared, and Funding Options, who will then pass them to with alternative lenders.

The original regulation for the measures, the Small and Medium Sized Business (Finance Platforms) Regulations 2015, came into force 1 January 2016.

According to HM Treasury, 71% of businesses in search of finance go to just one lender, with many opting to give up if rejected.

NatWest announced an expansion of its agreement with Funding Circle and Assetz Capital, adding RBS Social and Community Capital, Iwoca, and Together to its roster of alternative lenders.

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James Meekings, a co-founder of Funding Circle, told the FT: “Millions of pounds has already been lent to businesses through our referral partnership. By helping business access fast finance, the bank is able to retain or even win customers, which in turn helps the UK economy to grow.”