Small Businesses Seek Alternative Finance as Banks Turn Them Down
It's predicted demand for services such as property finance and crowdsourcing will increase by 28% over the next two years
UK small businesses are looking towards alternative sources of finance as too many are being turned down by traditional lenders, according to a report by Amicus.
A survey of 400 small enterprise owners found 16% of those seeking finance had been previously turned by a mainstream lender – a figure up from 11% in 2015.
31% of respondents claimed their inability to obtain finance from a traditional financial institution meant they had lost out on a business deal or investment opportunity with 15% believing they don’t make quick enough decisions.
12% highlighted inflexible lending conditions while 8% said insufficient knowledge and experience was a reason for them losing faith in traditional banks.
As a result, small businesses are increasing looking at alternative forms of finance such as property finance, crowdsourcing, invoice finance and asset finance with demand for such services expected to increase by an average of 28% over the next two years.
51% of small business owners believe that the greater flexibility offered by alternative finance providers makes them a more attractive option with a better ability to lend (46%) and longer payment terms (34%) also cited as reasons for the shift.
John Jenkins, CEO of Amicus said:
“It’s clear from this research that the demand for alternative sources of finance is continuing to grow in popularity. Mainstream lenders are falling short in terms of the agility and speed that is required by small businesses seeking finance.”