As SME lending under the Funding for Lending scheme continues to sag, new data from the latest BDRC Continental SME Finance Monitor shows another quarterly increase in the use of alternative finance products, including invoice finance.

According to BDRC Continental, the use of external finance, including invoice finance and crowdfunding, by SMEs grew by almost 40% in the second quarter of 2013 compared with the first three months of the year. The new edition of the SME Finance Monitor claims that one in five small firms is using these kinds of financial products.

The new figures suggest that awareness of finance products such as invoice finance, peer-to-peer lending and crowdfunding is growing among SMEs, and that further growth can be expected in the alternative finance sector. News that SME credit provision under the Funding for Lending scheme shrank during the same quarter underlines the role that these products have to play.

While the Funding for Lending scheme is helping to reduce the price of mortgage loans, it has yet to have a similar impact on small business lending – lending has actually fallen by £583 million. The continued failure of the scheme to improve access to SME finance is likely to focus more attention on the British Business Bank and, in particular, the part that invoice finance, peer-to-peer lending and other alternative finance products have to play.

Pressure will undoubtedly build on traditional lenders to increase SME lending, but in the meantime, the use of external finance, led by invoice finance, continues to grow among small businesses.

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