AWARENESS of peer-to-peer finance products among small- and medium-sized enterprises (SMEs) is at its lowest in the Midlands and the north of England, the British Business Bank (BBB) has revealed.
The figures, revealed in its latest annual Small Business Finance Markets report, showed fewer than 40 per cent of firms in the Midlands were aware of P2P lending, compared with almost 60 per cent in London.
Around half of firms in the south of England were aware of P2P, while just 40 per cent of firms in the north had come across it.
Despite the varying levels of awareness, the report found annual lending through P2P platforms increased by 34 per cent to £3.9bn in 2016. Business lending made up £1.3bn of that amount.
The report warns that while P2P is still growing steadily, the rate of growth has slowed since 2014 and 2015 when it was 144 per cent and 79 per cent respectively.
SMEs still seem to favour traditional products, with P2P making up just two per cent of all bank lending in the first three quarters of 2016.
But the BBB suggested the Innovative Finance ISA could stimulate growth in the P2P sector.
Its own activity showed 90 per cent of its finance is now deployed through smaller, newer or alternative finance providers. BBB lends through a number of P2P platforms, including Funding Circle.
Keith Morgan, chief executive of the BBB, said alternative finance is providing small businesses with greater choice and improved opportunities to find the right finance for their needs.
“While this continued improvement is welcome, our report shows that smaller businesses still face challenges on their growth journey,” said Morgan.
“Despite the improvement in finance markets, many seem to be holding back on their ambition, not simply because they can’t access finance but because they’re cautious about seeking it in the first place.
“Evidence in today’s report helps shape and direct the Bank’s efforts. Based on these insights, we will continue to focus our efforts on three key areas to help raise the growth potential of small businesses across the UK: providing capital to the scale-up businesses that play an important role in driving economic growth; addressing regional imbalances with initiatives like the Northern Powerhouse Investment Fund; and helping more small business know about and have confidence in using the finance options open to them.”