As the economic recovery continues to gain momentum, the Department of Business’ entrepreneur-in-residence has rubber-stamped the role of non-bank finance in driving growth.

The review of the business lending landscape by Laurence Tomlinson on BusinessZone.co.uk makes it clear that bank SME lending has evolved since the credit crunch to a point where it cannot met the finance needs of small businesses alone. The lending environment is improving but the truth is that SMEs need greater support if they are to fulfil the growth-engine role that the government wants them to.

Tomlinson makes a point that the bank SME lending sector would benefit from more competition (according to the author, Lloyds and RBS account for as much as 60% of SME lending). Such development would undoubtedly prove advantageous for businesses and, in the growth of non-bank business finance, this shift in infrastructure is already under way.

He also mentions that traditional lenders have become too detached from businesses and have lost a lot of trust. Such analysis underlines why transparent, flexible and straightforward services such as invoice finance, peer-to-peer lending and crowdsourcing have become so popular with SMEs: the peer-to-peer lending market alone grew by over 100% in 2013.

Economic growth forecasts are creeping upwards and SME sector optimism is reaching record levels for the post-recession period. It’s vital that this momentum is maintained and that small business development is nurtured. Tomlinson makes it clear that non-bank finance is essential to this process.

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