Small Business Demand for Alternative Finance Continues to Soar

The findings showed that small firms predict demand for alternative finance will increase by an average of 28% over the next two years. This represents an increase of 2% from last year’s survey2 where 26% forecasted growth. In 2015 the combined market activity for the UK online alternative finance industry grew to £3.2 billion, representing an 84% increase compared to the £1.74 billion in 20143.

More than half (51%) of small and medium sized enterprise (SME) owners said they have used or considered using alternative finance, up from 42% in last year’s survey. The most popular option, considered by 47% of respondents, was again crowdsourcing finance, including peer-to-peer lending and crowdfunding. This was followed by cash flow / invoice finance (32%), property finance such as bridging loans and commercial mortgages (29%) and asset finance (24%), which covers areas such as plant and machinery and business equipment.

On a regional basis, more than two thirds (69%) of small business owners in the North West predict a rise in demand for alternative finance over the next two years, the largest portion in the UK. Business owners in the East Midlands and West Midlands were second and third with 67% and 62% respectively. Just over half (52%) of small business owners in London predicted a rise in demand for alternative finance. SME owners in the North East were the least enthusiastic about alternative finance with 29% anticipating an increase.

The research also revealed the specific areas that SME owners are targeting for investment over the next 12 months. Two in five (39%) SME owners will look to invest in IT equipment, and nearly one five (18%) in cars, spending on average £14,496 and £5,290 respectively. 13% of SME owners said they would invest in telecoms equipment (£5,368) and 12% in plant and machinery (£7,426). One in ten (11%) plan to buy commercial vehicles, spending on average £11,163.

John Jenkins, CEO of Amicus commented: “This research shows that the business finance landscape continues to change. Demand for alternative finance is set to go from strength to strength over the coming years as mainstream lenders struggle to evolve to adequately support a thriving small business community.

“Small businesses are increasingly turning to specialist lenders who have the skills to understand their specific needs. Having built a strong business base from our property lending expertise we have significantly broadened our proposition into other areas of specialist lending. Our relationship-based approach resonates well in specialist lending markets that are poorly served by mainstream lenders.”