“Ask any small business owner or entrepreneur about the state of the UK’s financial system and you’ll likely receive a weary look followed by a lengthy diatribe on how unfairly Britain’s SMEs are being treated by the big boys of banking. However, as with every cloud, there is a silver lining for those looking to obtain finance fast for their burgeoning businesses.
Alternative finance has boomed since the 2007 – 2008 crisis changed the way that traditional banks operated with regard to small businesses. In fact, the alternative finance sector is now supplying £76 billion worth of much needed monetary support for UK SMEs; such is the demand for assistance from those looking to grow their companies and move on to the next level.
The infographic below shows that alternative lending now accounts for 46% of the total value of traditional term loans and overdrafts and that conventional banks are only approving around 10 to 15% of all loan applications they receive. Add to that the fact that loan applications can take weeks to be processed and it’s easy to see why alternative methods such as peer-to-peer lending and crowdfunding have become so popular of late.
Other options, too, have grown in popularity since the financial crisis hit. Take merchant cash advances, for example. Many businesses in their early stages welcome the fact that repayments are tied in with earnings, lowering the risk at what can be a treacherous time for cash flow.
All in all, the traditional banking system has made a rod for its own back by shunning startups and other small businesses over the last few years. Alternative finance is now here to stay and, as the infographic below shows, it looks as though it is only going to get bigger and better for borrowers.
Check out this infographic from 365 Business Finance to find out more about why alternative finance is leading the way with UK business owners.”