BCRS backs call for greater transparency from business lenders

The number of business lenders in the UK has exploded since the credit crunch, but business lenders are not regulated and there is a lack of transparency about their offers, says Jennifer Tankard, chief executive, Responsible Finance.

“There are now a growing number of organisations, in addition to the banks, providing small business finance with a wide range of products on offer” said Paul Kalinauckas, founder chief executive of BCRS Business Loans, established in 2002.

“Their numbers have increased significantly over the last 10 years and a whole new sector has emerged called Alternative Finance. However, business lenders, unlike personal lenders, are not regulated and there is a lack of transparency about their offers. This means that businesses may end up with finance products that they don’t understand, are more expensive than they thought and have conditions attached which may turn a minor cash flow problem into a full-scale viability crisis.”

Responsible Finance is calling for business lenders to clearly display the cost of credit by reporting the total cost of borrowing on representative examples of APR, charges on arrears and missed payments in a prescribed manner that allows borrowers to more easily compare across lenders.

BCRS Business Loans is the first lending institution in the UK to be accredited with the European Code of Good Conduct for Microcredit provision. “The EU wanted to include APR in the Code of Good Conduct”, said Mr Kalinauckas. “But there is no legislation yet to make it mandatory.”

Responsible Finance are calling on the Government to create a level playing field for business lending with more transparency and a focus on supporting borrower choice which is good for the economy.