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Non-bank finance use by SMEs reaches record levels

New figures from the Asset Based Finance Association (ABFA) show that SME use of non-bank finance, led by invoice finance, has hit record levels.

According to the ABFA, in the year to the end of March 2014, an average of £17.5 billion in asset-based finance was in use at any one time, up by 9% compared with the previous year, and 29% compared with the figure for 2009/10. At the same time, finance provider LDF has published a new report that claims that traditional bank loans to SMEs fell by 9% for the year to 30 March, while the ABFA has reported that traditional lending fell by over 19% between 2009/10 and 2013/14.

The area of non-bank finance that has witnessed the greatest growth according to ABFA is invoice finance, growing by 29% between 2009/10 and 2013/14. Invoice finance accounts for 80% of asset-based finance use by the association’s members.

The new figures offer further evidence that alternative finance has entered the mainstream and that its products have become essential to small businesses, plugging the SME lending gap caused by cautious bank lending policies. In recent months, the Funding Circle has marked a major milestone in SME lending and crowdfunding has been celebrated for successfully providing small business funding on a significant scale.

Non-bank finance continues to grow increasingly important in terms of providing access to SME funding. New data showing that almost a third of microbusinesses have been turned down for bank funding, leading to problems with cashflow and missed business opportunities, from the newest member of the Alternative Business Funding platform, suggests that this role will only get larger.

To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk.

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