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880 million reasons why alternative finance is the future of SME finance

The Asset Based Finance Association has provided 880 million reasons why Britain’s record number of start-ups and SMEs need alternative finance if they are to succeed.

According to the Association, UK businesses have doubled the amount they borrow against inventory since last year, with the total reaching £880 million at the end of Q1 2015. With regard to all types of asset-based finance, use was up 6% for the year to March to £18.9 billion, with invoice finance accounting for nearly 80% of the total.

The new data come at an interesting time. The think tank Centre for Entrepreneurs, which runs the Startup Britain campaign, has released figures that show the number of startups in the UK is set to reach a record level in 2015. According to the Centre, annual startup rates rose from 440,600 in 2011 to 581,173 in 2014. This total is expected to pass the 600,000 mark by the end of the year.

Looking at this evidence, demand for easier-to-access, more flexible and more transparent SME finance options has never been so high. Tellingly, over the same 12-month period, traditional SME lending fell to £375 billion according to the Bank of England, with recent research from BDRC Continental suggesting that small business growth is still being stifled by the prevailing cautiousness that characterises the general SME lending environment.

It is clear that if these startups and other small businesses are to expand and help stimulate wider economic growth, alternative finance has to play a greater role. The next step along this path is to increase awareness of the likes of invoice finance and peer-to-peer lending, and help SME owners master the skill of alternative finance.

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

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