2015 Alternative Finance Report Infographic

Another Astonishing Year for UK Alternative Finance

See the infographic by clicking the image above or downloading it here.

The UK alternative finance market grew to £3.2 billion in 2015, almost doubling in size in just 12 months. Peer-to-peer business lending is the largest model by volume of the UK online alternative finance market and continues to grow as companies across the country search for more favourable financing options than traditional banks can offer.

In 2015, an estimated £1.4 billion was lent to businesses over P2P platforms, a 99% increase on the previous year. With loans on these platforms averaging £76,000 and almost a quarter of all loan applications accepted, P2P lending is an attractive option for SMEs searching for capital to cover their every-day cash flow needs or those who need it to grow.

Business lending data

This year, invoice trading was included in the report, reflecting its increasingly common use by SMEs. Invoice trading platforms accepted 85% of all businesses who approached them. Such a high success rate has driven companies to explore invoice financing in greater and greater numbers; in the last two years the volume of invoices that have been financed has more than tripled, and is expected to grow further over the course of 2016.

At Growth Street we offer a flexible finance product for small businesses, where customers have access to an overdraft-like facility as well as the ability to finance their account receivables (i.e. invoices) as and when they choose. This flexibility helps companies obtain the benefits of both invoice financing and peer-to-peer lending simultaneously, while only paying for the finance they need, when they need it - resulting in a highly competitive cost.

Increased complexity = need for regulation

The report explains that as the sector has grown in size, so has its complexity, with many platforms now offering P2P loans to sole traders as well as Limited companies. Almost a third of the firms who operate in the sector defined themselves as having a ‘mixed’ or ‘other’ business model, as they do not easily fit into the existing taxonomy. This growing complexity can make it difficult to compare financing options for your company, and this difficulty was the driving force behind the #APR4SMEs campaign.

The full report is well worth reading for those interested in the major trends and developments in the alternative finance industry. It is an exciting time for the sector, and we are proud to be part of it. As these new forms of lending become increasingly mainstream, perhaps it's time to stop prefacing it with 'alternative'.

Written on in News