With high street banks reluctant to offer SMEs funding options, challenger banks and alternative finance providers offer businesses of all shapes and sizes access to new funding options.
Despite a move away from traditional business borrowing, we’re in the midst of a business lending revolution with the growing popularity of ‘challenger’ banks, digital lending and alternative finance options.
Know Your Money, one of the UK’s leading independent financial comparison websites, recently published new data to demonstrate that Peer-to-Peer and new style direct lenders are not just here to stay, they are wrestling market share away from traditional high street banks.
Know Your Money data revealed that:
• Peer to Peer and Challenger lenders comparison searches have more than doubled in 3 years
• 33% of Businesses selected a P2P or challenger lender on http://www.Knowyourmoney.co.uk in 2019 – compared to just 15% in 2017
• Alternative lending interest more than doubled in the last 2 years
This has been partly thanks to the UK government’s progressive regulations, designed to promote market competition and fill the estimated GBP 2.2bn funding gap.
Several schemes have been set up to encourage SMEs to use new-style lenders as an alternative to traditional high street banks and brokers.
Google trend data released in the research also revealed that:
• Searches for business loans have doubled in the last 8 years
• Challenger lenders such as Funding Circle and Ratesetter are increasingly popular
• Interest in traditional bank loans during this same period remains predominantly static – alternative lenders are stealing growth
This is a clear indication that businesses are now keen to explore more innovative finance options. While brokers and traditional loans still have a place today, the market is unrecognisable from the pre financial crisis landscape.
Nic Redfern, Finance Director for Know Your Money commented:
“It’s encouraging to see that new challenger banks and fintech products are giving small businesses more options than ever on how to fund their business growth. Capitalising on these opportunities is going to be key to fuelling the UK economy through the current uncertainty”
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About Know Your Money
Launched in 2004, http://www.Knowyourmoney.co.uk is an independent financial comparison website, providing clear, accurate and transparent comparisons for a wide range of financial products.
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