Non-bank lending to SMEs reaches 5-year peak

Data Insights 22 October 2013

A new report has confirmed that non-bank lending to small businesses in the UK has reached a five-year high.

Research found that increasing number of enterprises are turning their attention to alternative forms of credit as a means of stimulating their operation.

Lending by traditional banks has been on the decline for some time, but finance offered by peer-to-peer lenders and invoice financing has been heading in the other direction.

In fact, in the last year alone, the UK’s commercial finance brokers have arranged for £10.5 billion in credit for small and medium-sized enterprises (SMEs).

What’s more, asset-based lenders recorded their biggest annual total since 2008, with the overarching figure rising by as much as ten per cent to £17.4 billion in the year to June 2013.

The National Association of Commercial Finance Brokers has claimed that SME lending through leasing and asset finance has more than doubled since 2011.

Adam Tyler, chief executive of the finance brokers association, observed that the government’s Help-to-Buy scheme has eased conditions in the property market. On the flipside, however, he noted that the same situation has not been mirrored by mainstream lenders.

“Alternative finance is providing life support to the sickly SME market and will be vital to give it an extra impetus to boost the economic recovery. These figures show that alternative options from leasing and asset finance to peer-to-peer lending are increasingly taking up the slack and plugging a vital gap.”

Mr Tyler bemoaned the ignorance of some small firms for failing to recognise the less alternative lending opportunities that there are to be had.

And despite the improvements seen in recent months, it ought to be noted that lending remains some way short of where it was before the recession. In 2006-07, for example, brokers arranged £19.7 billion of finance.


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