The UK alternative finance market is proving incredibly popular with small businesses as they look to avoid traditional high street lenders. By November, alternative lending will hit the £5 billion mark, with companies shelling out on average £211.5m a month during 2015.
The growth of alternative finance
According to Fleximize, the UK alternative finance market could smash through the £5bn figure by November this year.
The transformation that alternative funding has gone through in the UK is nothing short of remarkable.
In 2012, the market was worth an estimated £267m, with small business owners trying to secure funding from unwilling banks that were still recovering from the economic crisis.
Since then however, alternate finance has really taken off with the sector being valued at £1.74bn in 2014.
In September, SME Insider found that the Bank of England’s Funding for Lending scheme had picked up in recent months, with net lending to small and medium-sized businesses rising by £490m during the second quarter.
‘More flexible and diverse’
The alternative funding company puts this astronomical growth down to two things. The first is that mainstream banks are lending less overall, with its analysis revealing that between July 2012 and December 2014, the value of credit provided to SMEs every month was 3.2 per cent lower than December 2013.
The second reason for the growth in alternative lending in general is that the space is a lot more crowded now, with there being over 100 firms in the sector.
‘‘Although banks have become less willing to lend to SMEs, the funding options open to businesses have never been more flexible and diverse,’’ stated Max Chmyshuk, founder and managing partner at Fleximize.
‘‘I would encourage every small business seeking funding to do a bit of research on the web and learn about these alternatives.’’
Check out our interview with former Dragon James Caan, who explains why now is the time to seek out alternative funding for your SME.