A new study from specialist lending firm, Amicus, reveals that one in six (16 per cent) small and medium sized enterprise (SME) owners seeking finance say they have been turned down by a mainstream lender, such as a high street bank, up from 11 per cent in 2015.
Nearly a third (31 per cent) of SME owners reported that their inability to secure finance terms with a mainstream lender meant they had lost out on a business deal or investment opportunity. As a result, this has led to greater interest in alternative finance – including forms such as property finance, crowdsourcing, invoice finance and asset finance.
Amicus says that the findings highlight how over twice as many small firms believe that mainstream lenders are unable to reach quick enough decisions (15 per cent, up from 6 per cent in 2015). More than one in ten (12 per cent) SME owners highlighted the inflexible lending conditions and 8 per cent the insufficient knowledge and experience as reasons for mainstream lender underperformance.
Over half of SME owners (51 per cent) believe that the greater flexibility offered by alternative finance providers makes them more attractive than traditional lenders, up from 45 per cent in 2015. Greater ability to lend (46 per cent) was second and longer payment terms (34 per cent, was third. Speed (30 per cent), specialist knowledge of their clients’ industries and challenges (29 per cent) and more compelling payment structures (27 per cent) were ranked fourth, fifth and sixth respectively.
SME owners predict that demand for alternative finance will increase by an average of 28 per cent over the next two years, up from 26 per cent in 2015 – with over half (51 per cent) having reported to have already used alternative finance or considered using it.
John Jenkins, CEO of Amicus says: “It’s clear from this research that the demand for alternative sources of finance is continuing to grow in popularity. Mainstream lenders are falling short in terms of the agility and speed that is required by SMEs seeking finance."
