Funding Options plugs into open banking with 20 lenders

Written by Ruby Hinchliffe
7th April 2020

Funding Options, a UK business loan marketplace, has adopted open banking technology in a bid to cut down on loan decision times as coronavirus puts new urgency on applications.

“Businesses applying for finance will see their application time reduced from days and hours, to just minutes,” the company says.

CEO: “It’s up to us to lead this revolution and improve the experience for all our customers”

By pre-approving businesses for loans with open banking as a service provider AccountScore, Funding Options no longer requires applicants to source original bank statements.

Instead, it can make applicants’ transaction histories available to lenders immediately, using standardised data which can be shared with multiple lenders.

The marketplace will initially pull banking data from 20 British business lenders, including iwoca, White Oak UK, and Liberis Finance.

But Funding Options acknowledges “the potential for expansion is huge”, as there are roughly 180 other finance providers in the UK which all use open banking.

“In the face of the current health crisis, when access to finance is vital for the survival of many businesses, reducing the time it takes to go from application to draw down is of paramount importance,” says Funding Options’ CEO Simon Cureton.

“This will require some behavioural changes, and as an industry, it’s up to us to lead this revolution and improve the experience for all our customers.”

The UK government’s Coronavirus Business Interruption Loan Scheme is largely only helping low-risk businesses

The government and high street banks came under fire last week after the Chancellor’s £330 billion coronavirus business loan package saw banks asking businesses for loan guarantees from their own savings or property, as well as laying on interest rates as high as 30% and enforcing rigorous application procedures.

By last Friday, only £145 million of the £330 billion had been lent out to businesses in need. The Chancellor is yet to curb interest rates, but he has made the application process slightly easier and tried to stop banks asking for unreasonable loan guarantees.

As a result of this slow start by the government, thousands of businesses have flocked to alternative lending platforms such as Funding Options. In March, the marketplace saw 10,000 businesses apply for more than £1 billion worth of loans.

This is because the government’s Coronavirus Business Interruption Loan Scheme is largely only helping low-risk businesses, meaning thousands are being rejected.

“There are a number of businesses out there that normally would be able to access finance, but currently can’t under more stringent lending criteria,” says Funding Option’s chief marketing officer David Keene.

“The key to untying the Gordian knot is to bring more alternative finance providers, business-to-business (B2B) marketplaces and other fintech organisations into the solution to complement the big high street banks,” he adds.

These tight criteria on business loans fed down by the government have also seen ministers begin talks on putting together a rescue package for Britain’s start-up companies, after investors warned many are at risk of collapse because they can’t get access to finance due to their unprofitability.