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

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

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We are a credit broker and not a lender and offer credit facilities from a panel of lenders