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Peer2Peer Finance News | July 24, 2019

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SMEs becoming more aware of P2P lending

SMEs becoming more aware of P2P lending
Marc Shoffman

AWARENESS of peer-to-peer lending has increased among small- and medium-sized enterprises (SMEs), research shows.

The latest SME Finance Monitor, from insight agency BDRC, shows 32 per cent of the 130,000 firms interviewed were aware of P2P lending in the fourth quarter of 2017 .

When combined with crowdfunding, awareness of these forms of finance was 46 per cent. This was up from 36 per cent at the start of 2017.

Larger SMEs tend to be more aware of P2P, the research shows, with 48 per cent of firms with 50 to 249 employees familiar with the sector, compared with just 32 per cent of one-man bands and 31 per cent of those with fewer than 10 members of staff.

Overall, the research shows eight in 10 loan and overdraft applications made by SMEs in the 18 months to the end of 2017 were successful.

The proportion of SMEs planning to apply for finance increased during 2017 from 10 per cent in the first quarter to 14 per cent in the final three months of the year.

SMEs also named the biggest barriers to their success, with 15 per cent citing legislation or political uncertainty, 14 per cent the economic climate and five per cent accessing finance.

The majority, 83 per cent, of SMEs were found to be self-reliant and were described as “happy non-seekers” of external finance.

Read more: P2P lending soars but SMEs generally wary of finance

Stephen Pegge, director of commercial finance at banking trade body UK Finance, said it was positive that fewer SMEs were seeing access to funding as an issue.

“It is encouraging that increasing numbers of small firms are looking to use finance to grow their business in the year ahead,” he said.

“However, most SMEs are still self-funding, with the vast majority not seeking any new external finance in the past year.

“Just one in 20 SMEs see access to finance as a major obstacle, far behind issues such as red tape, the current economic climate and political uncertainty.

“It appears that most small business owners are carefully considering their options before seeking external finance, with larger SMEs more likely to borrow to help expand their business.”

Read more: National investment bank needed to boost SME lending

Read more: Brexit ‘will hit innovative SMEs the hardest’