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Why more businesses are turning to alternative finance


Increasing numbers of businesses are turning to alternative sources of finance to fuel their growth ambitions as bank lending continues to fall.

The latest Small Business Finance Markets report from the British Business Bank shows that business lending by marketplace platforms in the year to September 2019 was 12% higher than the same period a year earlier.

“Marketplace business lending continues to grow in 2019, providing an alternative source of finance for SMEs seeking debt finance,” the government-owned British Business Bank said.

In comparison, gross flows of bank lending fell by 1.7% in 2019 to the lowest level in five years, according to figures from the Bank of England highlighted in the Small Business Finance Markets 2019/20 report.

Competition and innovation

Keith Morgan, CEO of the British Business Bank, said: “The past five years have seen increased competition and innovation in the supply of SME finance. The increased diversity in the range of providers, products and platforms, together with increasing volumes in these markets, means that smaller businesses have more finance options to choose from than ever before.

“When it comes to the demand for finance, smaller businesses are also prepared to consider more options, with over half of those businesses that sought finance in 2019 contacting providers outside the five main UK banks.”

The Bank of England has reported that demand for credit among small businesses is expected to increase during the first quarter of this year as political uncertainty reduced in the wake of the general election.

“UK GDP growth is projected to pick up a little in early 2020,” the Bank of England said in its January Monetary Policy Report, adding that “the recovery in UK growth is supported by a pick-up in global activity, a further decline in Brexit uncertainties and the government’s announced spending measures”.

The economic landscape can change rapidly – this means that small businesses have to be able to be nimble in order to make the most of market opportunities. As a result, it’s essential they have access to fast and flexible funding built around their needs.

Financial technology (fintech) and P2P lending platforms like LendingCrowd speed up the financing process by connecting borrowers directly with lenders.

Think Outside The Bank

At LendingCrowd, we know that business owners have better things to do with their time than wait for their loan application to be assessed. That’s why our team of experts aims to make a lending decision in as little as 24 hours.

Once we have all the information we need and the loan has been funded by our community of institutional and individual lenders, the funds could be in the borrower’s account the same working day.

LendingCrowd can offer loans from £5,000 to £500,000, with terms ranging from six months to five years. Borrowers can repay their loan early without penalty.

To apply for a loan with LendingCrowd, visit lendingcrowd.com/borrower or call 0345 564 1600 and our expert team can provide support at every step of the process. It’s time to Think Outside The Bank.

Fund your ambitions

As a borrower, it’s important to remember that defaulting might lead to the debt being passed to an agency for collection. LendingCrowd and its products are not covered by the Financial Services Compensation Scheme.

Article author

Gareth Mackie

Gareth Mackie

If you invest through LendingCrowd you should understand that your capital is at risk.

LendingCrowd is the trading name of Edinburgh Alternative Finance Limited, Company Number SC468392, authorised and regulated by the Financial Conduct Authority (Firm reference number 670991). LendingCrowd and its products are not covered by the Financial Services Compensation Scheme.

Read more about the risk involved when investing and borrowing.

The company's registered office is 23 Manor Place, Edinburgh, EH3 7DX.

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