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Raising awareness key to alternative finance growth

Alternative finance has grown at as a phenomenal rate in recent years but a new study shows that this pace may slow if more isn’t done to raise awareness of the invoice finance-led sector.

New research from the Wesleyan Bank shows that over 75% of SME owners in the UK resist seeking external fund because of concern over the risk of debt. In addition, it found that three quarters of SME owners feel unsure about external funding options and that these people in general have a better understanding of traditional lending options than they do of alternative finance services, such as invoice finance, peer-to-peer lending and crowdfunding.

The data provides a powerful insight into why traditional lenders continue to hold a significant SME finance market share despite the prolonged caution towards small business lending displayed by these institutions. This fear of change/borrowing culture is not only a threat to the growth of the alternative finance sector but also wider economic revitalisation. This is why raising awareness among small business owners of alternative finance services is so important – greater familiarity with the sector will help drive the business growth that the government has identified as so important to the health of the national economy.

There are signs that raising awareness of alternative finance services is on the agenda, including changes in legislation governing the use of invoice finance by SMEs with regard to unpaid invoices and credit data sharing. In addition, the government has launched a crackdown on rules that stifle small businesses and included in its remit is access to business finance.

Given the current climate and the government’s growing support for alternative finance, hopefully educating small business owners about all the available finance options available to them will be a priority.

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

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