Peer-to-peer lending and other alternative finance options continue to feed demand among small businesses, with half saying that they present new opportunities and nearly 70% saying that they would use them to raise capital.
Among SMEs with over £1.1m in annual revenue, this figure rises to 94%, according to new research by the UK Bond Network.
Lending arranged through non-traditional avenues passed the £1 billion mark last year as banks continue to tighten their belts. The sector has soared in popularity at a time when two-fifths of businesses say that lack of access to finance is holding back growth.
However, smaller businesses are often unaware of the existence of alternative finance schemes, or their benefits, say the researchers.
“Looking at the survey results, there’s a clear correlation between understanding alternative finance and willingness to use it,” says Christopher Maule, CEO and founder of UK Bond Network, who believes that alternative finance is “moving into the mainstream” and “democratising” the funding landscape for businesses.
“With this being the case, improving knowledge of alternative finance will be critical for increasing its uptake. While demonstrating its benefits to business owners themselves will be important, increasing understanding among accountants and professional advisors – the bodies SMEs trust – will be critical if the sector is to reach its full potential to support SME growth,” he added.