RBS to refer rejected borrowers to online platforms

Business lending platforms Assetz Capital and Funding Circle say the partnership will raise awareness of alternative lending options among small businesses.

UK-based marketplace lenders Assetz Capital and Funding Circle have sealed a referral partnership with Royal Bank of Scotland (RBS), according to statements from the lenders. Both business lenders anticipate a large increase in borrower enquiries on the back of the deal, the lenders told PDI.

RBS will refer small and medium-sized businesses it has turned down for credit to the online lending platforms. Customer data will not be shared, but businesses will be made aware of the alternative financing options from next week.

The bank has a 33 percent market share in UK small business lending. Natasha Jones, communications manager with Funding Circle said they expect thousands of new enquiries as a result of the partnership.

Stuart Law, co-founder of Assetz, told PDI that the secured lending platform anticipates its average loan size to gradually increase from £500,000 to £750,000 as a result of the referrals. Assetz yesterday (21 January) announced an investment of up to £150 million by US credit firm Victory Park Capital.

Many potential borrowers rejected by RBS could still meet the lending criteria of the platforms, both firms said, not through lower credit standards, but because they offer more sophisticated credit criteria.

Law pointed to the sector bias within some banks whereby they will not lend to a struggling sector. Assetz will lend to a good business in a bad sector, he explained.
He also said that capital adequacy requirements can distort banks’ lending criteria, leaving some credit-worthy borrowers out in the cold.

Alison Rose, chief executive in commercial and private banking at RBS said in a statement: “We are committed to doing the right thing for our customers by helping them access finance where we cannot help them within our current risk appetite.”


The partnership comes ahead of planned legislation proposed to force traditional bank lenders to share information on customers turned down for loans. The government initiative is designed to connect credit-starved businesses with alternative lenders.

The alternative lending sector, however, is not that warm on the idea. Neither Funding Circle nor Assetz feel that a portal where any lender can mine borrower information is practicable.

The partnership and referral approach is the way forward, said Law.

Funding Circle said the new RBS tie-up would work in a very similar way to its referral partnership with Santander.