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Borrowing innovation shows how far alternative finance has risen

With yet more evidence that alternative finance is going from strength to strength and that SMEs are increasingly giving traditional lenders the cold shoulder, it is clear just how much the lending landscape has changed.

New figures from the Asset Based Finance Association show a record level of lending secured against hard assets, up 9% compared with a year ago to £4.2 billion. Overall asset-based lending for the year to the end of June was up by £370 million to £19.3 billion. Interestingly, the Association also reported the continued growth of more unusual forms of borrowing, such as against intellectual property and income streams.

This innovation illustrates the growing engagement with the alternative finance sector, for which raising awareness of its services among small business owners is a priority. It also underlines the extent to which the SME lending sector has been overhauled in recent years, with small businesses embracing services such as invoice finance, peer-to-peer lending and crowdfunding in greater and greater numbers.

This move away from traditional lenders, which comes despite considerable efforts to win back SME custom, is underlined by new data from BCSG that show that small businesses are disengaging from these banks. The fear among these banks is that this disengagement will ultimately lose them business. It is not difficult to see where these SMEs are heading to maintain cashflow or raise funding for development. SME loan rejection figures suggest that these banks should expect little loyalty from businesses.

Alternative finance has risen from a minority player to a mainstream provider. The question now is how big a slice of the market will the alternative finance sector take?

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

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