Research from UK Bond Network indicates that while alternative finance is boosting UK SME growth, more still needs to be done to increase understanding and reach

Half (50%) of UK SMEs say that alternative finance has opened up new opportunities for funding, according to new research by UK Bond Network, the UK’s first peer to peer bond auction platform. Over two thirds (68%) of SMEs said they would consider using alternative finance to raise capital, with this figure increasing to 94% among companies with annual revenue over £1.1 million.

This news follows significant increases in peer-to-business finance in 2014, when the cumulative total of lending surpassed £1 billion. The research indicates that the multiplication of alternative finance platforms is being driven by a demand for business funding. Over a third (38%) of businesses feel that access to finance is holding back growth, with this figure rising to 78% among organisations with annual revenue over £1.1 million.

“Alternative finance is moving into the mainstream,” says Christopher Maule, CEO and founder of UK Bond Network. “It’s providing small and medium sized enterprises with new funding options and democratising the business financing landscape. In contrast to banks, alternative finance platforms offer business borrowers fast, flexible and simple access to finance – making them an attractive and increasingly popular choice.”

With economic health dependent on SMEs’ ability to raise capital for expansion and consequent job creation, the growth of the alternative finance sector looks set to continue. Nevertheless, the research indicates that awareness and understanding of alternative finance still needs to improve if SMEs are to take advantage of the opportunities it offers – with smaller businesses worryingly less knowledgeable than larger organisations. According to the survey findings, 42% of respondents with business revenue of £1 million or less said they were unaware of alternative finance, compared to just 15% of respondents with business revenue of £1.1 million or over.

“Looking at the survey results, there’s a clear correlation between understanding alternative finance and willingness to use it,” comments Maule. “With this being the case, improving knowledge of alternative finance will be critical for increasing its uptake. While demonstrating its benefits to business owners themselves will be important, increasing understanding among accountants and professional advisors – the bodies SMEs trust – will be critical if the sector is to reach its full potential to support SME growth.”