Challenger bank TSB has unveiled its latest weapon in the fight against Britain’s high street giants, a business marketplace where SMEs can compare financing options from a host of lenders in one place.
Small business banking is dominated by the big banks that control over 90% of the market between them. TSB claims that many small businesses only approach the largest banks when seeking finance, and that a large number of these applications are rejected – in the case of first time start-up borrowers the rejection rate is around 50%.
TSB is working with FundingOptions to launch the Business Marketplace in May, helping small firms scan the market in minutes. The bank says that it is the only lender in the market that lets companies compare options from other providers alongside its own offers.
Richard Davies, director, commercial banking, TSB, says: “There is a huge funding gap for small businesses that exists in the UK today and it is stunting the growth of these firms and stopping them from investing to grow. Bringing more competition to UK banking is in our DNA, and Business Marketplace will allow a small business owner to easily compare what’s available in the market.”
The bank is also gearing up to launch a digital lending platform, offering millions of pounds to firms that will be able to apply and receive instant credit checks and approval online.
TSB, which was spun off from Lloyds on government orders in 2013 before being bought by Spain’s Sabadell Group in 2015, has become a vocal critic of the dominance enjoyed by a handful of UK banks. Last year it called on the Competition and Markets Authority to fix the UK’s “broken banking market” by making it easier to switch bank accounts and derided the much-vaunted Open Banking revolution.