UK Alternative Finance Market to Double in Growth in 2015

Alternative funding provided over £1.2bn in finance to 7,000 UK small businesses this year

Alternative funding to small and mid-sized businesses is on track to reach £1.74bn by the end of this year, with predictions that it will increase by more than double to £4.4bn by the end of 2015, according to a new study.

The research, which is the largest alternative finance study to date, found that in the first three quarters of 2014 alternative finance platforms enabled investment of £1.2bn to over 7,000 small and medium firms.

The report revealed that peer-to-peer business lending was the most popular form of alternative finance totalling £749m, followed by peer-to peer consumer lending which equalled £547m. Equity-based crowdfunding was another popular option in 2014, up 201% to £84m.

Published by innovation foundation Nesta and the University of Cambridge, the research demonstrates the increasing popularity of alternative finance over the years – increasing from £267m in 2012 to £666m in 2013, and now forecasted to reach £1.74bn by the end of this year.

Alternative finance is predicted to continue to double as bank lending, which was down £400m last quarter, further declines. Awareness has also increased with 58% of UK consumers surveyed in the report saying they had heard of alternative finance platforms, with 14% stating they had used one to seek, lend or donate funds.

Liam Collins, co-author of the report, discussed the findings:

“These findings shed light on a growing movement that is revolutionising banking, investing and giving by using technology to simplify the links between those who want to invest money and those who need it…”

“The UK is leading the way globally, and with significant potential for the market to expand it won’t be long before we see alternative finance moving into the mainstream.”

For more information and to see if alternative funding is right for your business, have a look at our sister site’s alternative finance section here.

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