A scheme to provide alternative finance to small and medium-sized enterprises (SMEs) rejected by big banks has paid out £3.8m (€4.17m) to 230 businesses.

This was less than 3% of the 8100 businesses that were referred by the scheme.

The bank referral scheme launched in November 2016 and is backed by the UK government. The scheme requires nine banks to pass the details of SMEs they have rejected for loans to Funding Exchange, Business Finance Compared, and Funding Options.

The three funding platforms then share business details to alternative finance providers and get involved to increase SMEs’ chances of receiving finance. Of the deals signed so far, loans ranged from £200 to £500,000, and the average size was £16,000.

Stephen Barclay, the economic secretary to the Treasury, said: “Small- and medium-sized businesses are the backbone of Britain’s economy and it is right they have access to a wide range of sources of finance.

“A refusal from a big bank should not be the end of the line for a small business and, thanks to our match-making scheme they have another avenue to try for funding.”

In April, Leasing Life reported that the scheme was under review after civil service ‘disappointment’ over the use of the scheme. A source told us that many SMEs would rather search elsewhere for funds than allow their data to be passed to a third party.