SMEs predict demand for alternative financing will surge » SMEInsider

SMEs predict demand for alternative financing will surge

Nearly two-thirds of small business owners believe the demand for alternative forms of financing, such as crowdsourcing and property finance, will increase over the next two years.

64 per cent of small business owners believe that the demand for alternative financing will increase at an average rate of 26 per cent over the next two years. Only 8 per cent have said they believe that demand will actually drop.

The research, carried out by Amicus, also found that the amount raised by alternative financing in 2014 was an estimated £1.74 billion, twice as much as 2013.

Over four out of ten (42 per cent) small firms said they considered using alternative forms of lending in the past five years. Crowdsourcing was the most popular method, with 24 per cent saying they considered peer-to-peer lending and crowdfunding. Just under one-fifth (18 per cent) used cash flow/invoice finance.

This research shows that the business finance landscape has changed for good and demand for alternative finance is set to go from strength to strength over the coming years,” commented John Jenkins, CEO of Amicus.

Regionally, 77 per cent of London small businesses predict an increase in demand for alternative finance, the highest in any UK region. Scottish and Welsh businesses were in agreement, with 69 per cent in each country believing that demand would increase.

However, SMEs in the West Midlands were less convinced with just over half (53 per cent) expecting an increase.

Olly Betts, CEO of Business Finance compared, expects to see his firm experience a  ”surge in the supply of products to the alternative finance market,”

This will in turn will further compound an already confusing journey to finance for SMES. Part of the solution to this is to make it easier for small businesses to see all the options available to them, to compare the availability and cost of funding options and to understand the likelihood of getting the finance they need.”