Are alternative lenders filling the funding gap?

Traditional lenders are struggling to provide many SME’s with the funding that they require. This is due to a combination of stricter banking regulations, the uncertainty around Brexit, and the exacting requirements that high street lenders seek from businesses before they will advance funds.The size of this funding gap is anticipated to be around £22bn.

However, and following significant growth, the alternative business lending market is now starting to fill some of the gap. Estimates show that this sector has now reached £1.82bn- 3.43% of gross national banks’ lending to SME’s based on the Bank of England 2014 total market figures – but still have some way to go.


Also of help is that institutional involvement in these lenders has grown nearly three-fold over a 2- year period, providing the catalyst for the sector to compete with traditional forms of lending. However, these lenders still often lack the brand awareness of the high street banks, so there remains a host of smaller businesses in need of funding who do not know which route to go down. Reputable brokers of course partner with the alternative funders to provide the knowledge of best funding options and access to the most appropriate alternative funder for a client.


Alternative lenders have had to evolve and innovate to gain market share against the larger, more established lenders. The latest development is a range of ideas currently taking place in the SME credit risk modelling as lenders uncover patterns in the underserved market segment. This will shortly be enhanced by commercial credit data sharing, where 9 major banks will have to share credit information on all their willing SME clients.

 

We look forward to the continued growth of this sector, and of course Key will keep up to date with all of the latest developments and best lenders in the market for their client’s needs.


Call Key Commercial Finance Solutions Ltd today and our team we will be more than happy to assist you further.