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Appeals Process improves banking for firms seeking cash

The Appeals Process, which gives small businesses the right to challenge a bank’s decision on finance, has now put at least £50 million back into SME lending. That’s one of the findings of my latest quarterly report, launched on Monday to provide an overview of the initiative from my perspective as its Independent External Reviewer.

Thirteen high street lenders now have the process up and rolling, which means that virtually all small and medium-sized businesses across the UK now have the right to appeal if they are turned down for funding by their bank. To qualify, they just need to have a group turnover of £25 million or less.

Nearly 12,000 businesses have now appealed with their bank since the process was launched in 2011, and between October and December last year – the months my report refers to – the number of appeals increased by 20% on the same period in 2013.

Why the increase? Well I believe that it is partly down to awareness-raising by the banks and the extra efforts they’re making to signpost business customers to the scheme when they’re turned down. Many banks also put resources into the Better Business Finance campaign last year, which reached an estimated 10.3 million people in the UK through PR, advertising and social media.

It is important to note, however, that appeals will have also risen due to some extra banking products – like overdrafts and credit cards – being included in the process, making the scheme relevant to more businesses.

As well as a rise in appeals, my report shows that the number of decisions that are overturned through the Appeals Process has been reducing over time. This is largely due to the banks having upgraded their systems which allow for better decisions, and better conversations that mean bank staff are making the right call the first time around.

The Appeals Process continues to unlock millions of pounds of lending for businesses through overturns. It has also improved the dialogue between relationship managers and businesses so more firms now fully understand what they have to do to have an application accepted. I believe that by continuing to spread the word, not only do we improve banking for small firms but we also encourage more business owners to apply for finance in the first place.