Do SMEs understand alternative finance? » SMEInsider

Do SMEs understand alternative finance?

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The majority of small businesses do not have a clear understanding of alternative finance, with less than 10 per cent of SME owners approaching alternative platforms for funding.

Merchant Money, a finance provider for UK SMEs has released its annual alternative finance guide for SMEs. In conjunction with a Nesta study, the firm has found that over half of all SMEs (56 per cent) are unfamiliar with alternative finance.

For the 44 per cent of small business owners that are familiar with unconventional forms of finance, just 9 per cent actually approached alternative lenders for help.

Alternative finance is an extremely popular method of gaining cash within the UK. In 2014, £1.74 billion was raised through various alternative finance models.

If you’re an SME owner interested in gaining alternative finance but have no idea where to start, take a look at the following platforms to give you an idea of where you can gain alternative finance.

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1. Funding Circle

Funding Circle is one of the world’s biggest Peer-to-peer (P2P) funding websites that is exclusively focused on helping small businesses.

In total, more than £600m ($1bn) has been lent to 8,000 businesses in the UK and USA. Today, businesses can borrow directly from a wide range of investors, including more than 40,000 people, the UK government and local councils.

2. Crowdcube

Crowdcube specialises in providing alternative finance via is investment crowdfunding platform. They enable normal people to invest alongside professional investors in start-up, early stage and growth businesses through equity, debt and investment fund options.

3. Market Invoice

Invoice trading is becoming a very popular form of alternative finance for SMEs. Small business owners who are unable to wait for weeks to get paid can now trade their invoice in to gain their fee.

MarketInvoice’s online platform gives clients access to funds in outstanding invoices, otherwise tied up for between 30 to 120 days.

SMEs can sign up online, sell an invoice and draw down funds on the same day. MarketInvoice launched in 2011 and over £300m has been already been given to businesses worldwide.