SME bosses aware of P2P lending but cautious about using it

ALMOST half of finance directors in small-and-medium-sized enterprises (SMEs) have admitted feeling uncomfortable about using peer-to-peer lending to help fund their firm.

Research among 200 SMEs by recruitment specialist Tindall Perry found while 74 per cent of finance directors describe their knowledge of alternative finance as average or above, only a quarter suggested that they were comfortable with accessing crowdfunding, with P2P lending also scoring less than 50 per cent.

In contrast, 85 per cent of companies said that they understood how best to access asset-based lending, while invoice finance, trade finance and venture capital all saw a positive response rate of between 55 and 75 per cent.

Traditional bank lending remained the funding of choice for financial directors, with 83 per cent suggesting that they would approach their bank for finance in the first instance.

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“In recent years, the benefits of alternative finance have become increasingly apparent to businesses across the country, particularly when helping our SMEs to unlock growth,” Leyla Tindall, managing director at Tindall Perry Partnership, said.

“However, in many instances there remains a disconnect between awareness and understanding. For most finance directors, that lack of understanding prevents them from accessing peer-to-peer and crowdfunding platforms, which could be having a detrimental effect on growth.

“Having the right management team and financial advice is crucial when it comes to accessing funding, as well as developing the best training plan to ensure knowledge gaps are plugged.”

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