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RBS SME lending report underlines non-bank finance role

If any more evidence was required to confirm that invoice finance has a major role to play in small business finance in 2014, then Royal Bank of Scotland SME lending-gate is it.

The new report on the SME lending practices of the Royal Bank of Scotland, in which the bank is accused of purposefully forcing SMEs out of business in order to increase its profits, makes for uncomfortable reading. Just as illuminating is the revelation that the bank overshot a reduction in SME lending – its small business loans have fallen by £17 billion since it was saved by a taxpayer-funded bailout.

Whether the Royal Bank of Scotland deserves to be singled out remains to be seen – it is difficult to believe that the bank is alone in having implemented these types of policy and criticism of bank SME lending has been widespread.

The RBS report has brought a fresh focus on the state of small business lending in the UK and, interestingly, mention of non-bank finance and its growing attractiveness has popped up around the edges of discussion pieces. That alternative finance services such as invoice finance are becoming part of mainstream conversations about SME finance is telling, but arguably it deserves a more central platform.

If 2013 has been the year of alternative finance, then these recent revelations only give more credence to the belief that services such as invoice finance and peer-to-peer lending will have an even greater role to play in 2014.

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