Business leaders in the UK are branching out from bank borrowing and choosing alternative sources of funding. New analysis from Fleximize, an alternative SME lender, reveals that loans from companies such as their own is set to smash the £5 billion mark by November this year.
Commercial mortgages, factoring, discount and asset financing are all funding streams that are attracting business borrowers. Fleximize estimates that the sector is lending on average around £211.5 million a month this year to UK businesses.
The company claims that one reason for the increase in alternative funding is because mainstream banks are now lending less overall. Their analysis shows that the value of credit provided to small and medium-sized businesses every month between July 2012 and December 2014 was, on average, 3.2 per cent lower than a year earlier.
Max Chmyshuk, Founder and Managing Partner at Fleximize, says:
“Although banks have become less willing to lend to SMEs, the funding options open to businesses have never been more flexible and diverse.
“Fleximize itself is a great example of an alternative finance provider, offering a choice of flexible loans and revenue-based financing to small and medium-sized businesses. We already have hundreds of happy customers and we’re looking to help many more.”
Head of Businesscomparison.com, Philip Brennan, says a competitive financial marketplace often means the best deals are available to businesses,
“Alternative finance is now in the mainstream. The likes of Peer to Peer leads such Zopa, RateSetter and Funding Circle are recognised brands. New lenders are coming through on what feels like a monthly basis now. The competition can only help make these products more competitive and hopefully give a greater incentive for banks to think outside the box with product design, to fulfil the requirements of SME’s who’s expectations are increasing based on their experience in the consumer world.
“It does also highlight the importance for the FCA to push forward its plan to regulate the industry and protect businesses from unfair practices. £5bn is positive but only a fraction of the overall business lending figure in the UK.
“Trying to get indicative rates for many business loan products can be difficult as a majority of products are manual underwritten and price according to risk. We will continue to work to give businesses transparency in their decision process to make sure they are finding the right funding for their business be it Asset finance, Invoice Factoring, Merchant cash advance or a business loan.”