Alternative finance for SMEs: Are small firms boycotting banks?


The challenges faced by small businesses has been a hot topic over the last few years, from late payments to the fallout of Brexit.

For many SME’s, the need for an injection of cash has never been more prevalent. However, since 2011, the value of overdraft facilities available to SME’s has roughly halved.

For many years, it has been argued that high street banks have been turning their backs on small businesses in favour of more established and lower risk investments.

The answer has generally seemed to be what’s been dubbed ‘alternative finance’, a name given to a range of solutions which offer faster response times and tend to be quicker to embrace new technologies.

But are alternative lenders really causing small businesses to steer away from traditional bank lending?

New research would suggest the answer is not necessarily.

A survey of over 400 SME’s found that 59% accessed finance through their bank, with 11% choosing alternative finance providers. A further 9% used a public sector grant, 8% went with a government lending body and 6% turned to venture capital for their finance.

Perhaps most concerning of all is that 15% said they were unaware of other types of available funding.

Should SME’s be looking elsewhere?

While it’s clear that many SME’s haven’t fully embraced the changing financial climate, there are many reasons why it might be time to take stock of your options.

There are myriad reasons you may want to seek funding, and while it is about growth and investment for some businesses, others may just be looking for a way to subsidise their cash flow.

Depending on your specific needs, you may find that an alternative finance solution is actually better suited to you than a traditional bank loan.

Funding methods such as invoice finance, trade finance and asset finance have been created to fill a particular need or solve a specific problem.

Peer-to-peer lending, meanwhile, allows you to borrow money directly from investors, which often results in lower rates and fixed interest rates.

Crowdfunding has also been gaining popularity in recent years and can be a great option for start-ups. You pitch your idea to investors and if they are interested, they may contribute money in return for a reward of your choosing.

If you are looking for funding for your business, speaking to a finance broker can help you to gain a picture of all the options available, and which ones are suited to your specific requirements.

Not only will they assist you in finding the right type of funding, but they can also help uncover the lender who can offer you the most appropriate facility for the finance you need.

To speak to one of our funding consultants you can call us on 0800 9774833 or get in touch via our contact form.


Some of the funders we work with

  • Close Brothers Invoice Finance
  • Sonovate
  • Cynergy Business Finance
  • Clear Factor
  • Royal Bank of Scotland
  • MaxCap
  • InvoCap
  • Kriya
  • Time Finance
  • Leumi ABL
  • Davenham Asset Finance
  • Lloyds Bank Commercial Finance
  • Aldermore Invoice Finance
  • Haydock Finance Ltd
  • ABN AMRO Commercial Finance
  • Accelerated Payments
  • Blazehill Capital
  • Ultimate Finance Group
  • Giant
  • Regency Factors
  • Woodsford Tradebridge
  • IGF Invoice Finance
  • Roma Finance
  • Partnership Invoice Finance
  • Merchant Money
  • Investec
  • Nationwide Finance
  • Santander Corporate & Commercial
  • Berkeley Trade Finance Ltd
  • Team Factors
  • Skipton Business Finance
  • Peak Cashflow
  • Tradeplus24
  • Castlebridge
  • Optimum Finance
  • Pulse Cashflow Finance
  • eCapital Commercial Finance
  • Davenham Trade Finance
  • 4Syte
  • Praetura Invoice Finance
  • Barclays
  • PNC Business Credit
  • Metro Bank SME Finance

Authorised and regulated by the Financial Conduct Authority (FCA number 730445)
We are a credit broker and not a lender and offer credit facilities from a panel of lenders