As the impact of the referendum vote on businesses reverberates around Europe, new data from the Asset Based Finance Association shows how important alternative finance is to future stability.

After the uncertainty that affected the business sector in the run up to the vote on EU membership, UK small businesses are facing another prolonged period of instability as the country waits for a new government to take Brexit forward. With the pound severely weakened and major credit ratings lost, the new occupant of No.10 will have his or her work cut out in terms of achieving economic stability.

To ride out this storm, SMEs will need to a solid financial strategy in place and this platform has to include alternative finance. According to the Asset Based Finance Association, the use of invoice finance and asset-based finance has grown by 7% in the UK, reaching a total of £3.63 billion. The figures underline the growing popularity of alternative finance, which offers the flexibility, reliability, accessibility and affordability that small businesses have found in short demand elsewhere.

The importance of services such as invoice finance and asset-based finance is likely to grow further in the wake of the vote on EU membership. Traditional lenders are likely to remain cautious in their approach to small business lending and any funding that involves EU institutions must now be in doubt. The £100m lending programme for UK SMEs by the European Investment Bank, whose funding was to be made available through the Funding Circle peer-to-peer lending platform, has already been frozen.

These are uncertain times for UK small business owners, whether they’ve welcomed the result of the vote or not, because a period of volatility looks unavoidable. Financial planning is set to come under intense pressure and plans that include alternative finance facilities are stronger.

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