SMALLER businesses’ awareness of peer-to-peer lending increased slightly last year, although the growth of the alternative finance market slowed, a new report reveals.
The British Business Bank launched its annual Small Business Finance Markets report on Monday. It found that 52 per cent of smaller businesses surveyed across the UK were aware of P2P, up from 47 per cent in 2017.
70 per cent of smaller firms said they were aware of equity crowdfunding, compared to 60 per cent in 2017.
And 69 per cent said they were aware of venture capital, up from 62 per cent the previous year.
Despite this increase in awareness, the alternative finance market grew at a slower pace in 2018, the report said.
Asset finance grew by just three per cent in 2018, compared to 10 per cent in 2017, and P2P business lending by 18 per cent, compared to 51 per cent growth in 2017.
The state-backed development bank found that overall demand for external finance among smaller firms has continued to fall, as businesses delay their growth plans ahead of Brexit.
Just 36 per cent used external finance last year, compared to 44 per cent in 2012.
Despite these concerns, just over half of smaller firms still aspire to grow over the next 12 months.
“It is clear that a lack of confidence is affecting many smaller businesses, as evidenced by a continuing drop in demand for external finance,” said Keith Morgan, chief executive of the British Business Bank.
“It is, however, encouraging to see that half still aspire to grow and that there’s increased awareness of a broader range of finance options. This will be an important factor in ensuring that smaller businesses are better placed to make the right finance choices as uncertainty diminishes and confidence returns.”