The launch of the bank referral scheme is a watershed moment not just for the alternative finance sector, but also for small business owners, because it will significantly boost awareness of non-bank finance services that have long been a lifeline to SMEs.

According to the new government scheme, which is part of the 2015 Small Business Enterprise and Employment Act, the UK’s major banks are now legally obliged to refer small businesses they refuse to offer finance to alternative finance providers.

Despite the rise in popularity of alternative finance, the big banks still dominate the SME finance market, so the importance of this scheme in opening up a new gateway to the likes of invoice finance, asset finance, crowdfunding and peer-to-peer lending cannot be understated. This means a substantial number of small businesses will be referred to non-bank finance providers by the likes of RBS, Lloyds, HSBC, Barclays and Santander, the result of which should be a timely boost to the health of the UK business sector.

It’s worth remembering that according to the latest Department for Business, Innovation and Skills data, 50% of small businesses applying for finance for the first time were rejected in 2013, with over a third permanently shelving their spending plans. By raising awareness of alternative finance services, with Funding Options, Business Finance Compared and Funding Xchange matching SMEs to non-bank finance options, there is the potential to notably increase SME investment.

Tellingly, in Opus Energy’s recent Brighter Business Report of 500 SME senior decision-makers that showed UK SMEs are predicting strong income growth, 10% of key executives said better access to finance would give the biggest boost to their business. The bank referral scheme should help meet this need and by making small business owners more aware of the funding options available to them, magnify the positive impact on SME revenue.

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