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Industry Insights

The growth of the alternative finance market

Looking to kick start your business idea or accelerate your business but need a cash injection to take your company onto the next level? You’ve certainly landed in the right place!

In the infographic below, you’ll find everything you need to know about the growth of the alternative finance market and the growth of peer-to-peer business lending, as well as alternative finance distributions. After all, sourcing business funding can be a daunting and challenging prospect, especially if you’re finding your way in the early stages of business or launching your business idea. The good news is, the alternative finance market is continuing to grow at a rapid pace, having increased by 43.125% between 2015 and 2016, and this growth rate shows no signs of slowing down.

The infographic highlights the level of funds received throughout every UK region, as well as the share of value and volume of bank lending and business population across Great Britain. SMEs seek out additional funding for a whole host of different reasons. From accelerating their business growth and sourcing more working capital, through to covering short-term legal costs, it’s not uncommon for small businesses to seek financial support and funding at crucial stages of their business. It also highlights the five most funded industries in peer to peer business lending which include leisure and hospitality, manufacturing, finance, real estate and housing, and construction.

Above all, when it comes to sourcing funding for your business, it certainly pays to have an awareness of the products and specific providers of finance available to you.

 

Here at Boost Capital, we provide business loans that can work with your unique business model and we don’t follow many of the stipulations a traditional bank loan would. We’re dedicated to providing you with the funding you need and helping your business succeed before you even apply. If you’re have any more queries about applying for business loans, take a look at our frequently asked questions or speak to a member of our friendly team on 0800 138 9080.

Introduction

The UK is at the centre of the massive growth of the European alternative finance sector and the following infographic aims to help you understand a little more of what this means. We explore the trends of loan seeking SMEs, considering their options for finance, how accessible financing is to them, their relationships towards banks and their motivations for borrowing.

What

Clearly, the industry is growing – between 2015 and 2016 it increased by 43.125%.

Growth in Gross Lending by Market Place Lenders

The private sector businesses grew to 5.7 million in 2017. SMEs account for 99% of all private sector firms with £1.9 trillion turnover. Additionally, 37% are using external finance (excluding trade credit), with usage concentrated in core debt products.

Contented: Low growth ambitions and innovation, relatively financial confident – but not informed.

Fighters: some growth ambitions and innovation, want to overcome obstacles such as cash-flow, skills, politics, economy and financial access.

Savvy Entrepreneurs: innovative, confident in assessing finance options. Most likely to have a financial qualification.

Quicksilvers: the fastest growing businesses with the most ambitious growth plans, relatively able to assess financial options but still likely to employ someone with a financial qualification.

Where

Level of funding received by UK region (2016)

Although the British Business Bank has provided over £4 billion of finance to UK businesses they reject 25% of small business’ loan applications. As a result, 70% of small businesses would choose not to borrow from a bank even if this meant they wouldn’t expand

68% of SMEs took out a business finance facility in 2017 and the 52% of SMEs owners that knew of the finance options beyond traditional banking will maintain a competitive advantage over those using banks.

Who

The top five most funded industries in alternative business lending:

  • Leisure and hospitality
  • Manufacturing
  • Retail
  • Real estate and housing
  • Construction

Alternative finance distributions

  • 2014: £1 billion for 7,000 SMEs
  • 2015: £2.2 billion for 20,000 SMEs
  • 2016: £3.3 billion for 32,800 SMEs

The principal source of finance for business was derived from debt-based models, which lent £2.9 billion across 30,000 businesses.

Why

Why do SMEs seek out additional funding?

  • 37% do so to accelerate their business growth
  • 25% are looking for more working capital
  • 38% is made up of many niche uses – from short term legal costs to vital venue refurbishments

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More businesses than ever before are looking to Boost Capital for their business financing needs. To learn more about how our UK small business loans work or to explore the business financing options that are available to you, contact us today!
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