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Demand for alternative finance rises as sector continues to evolve

  • 19/04/2016
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Demand for alternative finance rises as sector continues to evolve
Demand for alternative finance is set to rise significantly over the next two years, according to a study by specialist lender Amicus Finance.

The survey of small business owners found that 53% expected the requirement for alternative finance – including crowdsourcing, invoice finance and asset finance – to rise among their peers, anticipating an average increase in demand of 28%, up from 26% forecast in 2015.

The combined market activity for the UK online alternative finance industry grew to £3.2bn in 2015, an 84% increase on the the £1.74bn seen in 2014, the study found.

John Jenkins (pictured), chief executive of Amicus, said the research proves that the business finance landscape continues to change.

“Demand for alternative finance is set to go from strength to strength over the coming years as mainstream lenders struggle to evolve to adequately support a thriving small business community,” he said.

“Small businesses are increasingly turning to specialist lenders who have the skills to understand their specific needs.”

The number of small and medium sized enterprise (SME) owners who said they have used or considered using alternative finance in the past year also rose, up from 42% in last year’s survey to 51%.

The most popular option, considered by 47% of respondents, was crowdsourcing finance, including peer-to-peer lending and crowdfunding; followed by cashflow/invoice finance (32%); property finance, such as bridging loans and commercial mortgages (29%); and asset finance (24%), which covers areas such as plant and machinery and business equipment.

On a regional basis, more than two thirds (69%) of small business owners in the North West predict a rise in demand for alternative finance over the next two years, the largest portion in the UK. SME owners in the North East were the least enthusiastic about alternative finance, with 29% anticipating an increase.

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