ONE fifth of small- and medium- sized enterprises (SMEs) are looking to peer-to-peer financing to fund their growth, a new study has found.
According to the latest C2FO Working Capital Outlook Survey, almost one in five (18 per cent) of Europe- and US-based SMEs are already using P2P lending, while 20 per cent are using some form of invoice financing solution in an effort to diversify away from bank funding.
“The aberrationally low interest rate environment is polarizing the global liquidity imbalance,” said Sandy Kemper, chairman and chief executive of C2FO.
“It is therefore increasingly important for those SMEs to consider alternative financing options that can close this gap and kick-start economic growth.”
The C2FO report found that almost one quarter (24 per cent) of SMEs had limited or no ability to borrow, largely due to prohibitive interest rates. Less than half (48 per cent) of those surveyed said that they could access financing at rates below 8 percent, with the most expensive rates to be found in the UK.
The most significant source of SME funding comes from the companies’ own cash flow, with 76 per cent of businesses in Europe and the US funding their own growth through profits.