MANCHESTER-BASED small businesses are more likely to turn to alternative finance providers for funding compared with firms elsewhere in the country, new research has found.
A survey of 222 businesses in the North West by peer-to-peer lender Growth Street revealed that 43 per cent of Mancunian businesses would consider going somewhere other than a bank for their finance. This is up from 27 per cent in 2018 and 7 per cent above the nation as a whole.
Looking at the North West as a whole, it found 39 per cent of small- and medium-sized enterprises (SMEs) in the region had considered alternative finance over traditional banks, against a national average of 35 per cent.
Growth Street’s survey also found that respondents had a “healthy knowledge” of alternative finance solutions.
The North West reported 72 per cent knowledge of these, compared to 66 per cent in the rest of the UK. In Manchester, the figure rose from 58 per cent in 2018 to 73 per cent, higher than the 71 per cent reported in London.
Across the UK more broadly, people’s understanding of alternative finance options seems to be rising, the platform said, with 34 per cent of respondents saying they were not at all confident in their knowledge of non-bank funding, significantly fewer than the 45 per cent recorded last year.
Two-thirds of respondents had at least some knowledge of finance outside of banks, up from just over half in 2018.
“With big initiatives like the Northern Powerhouse, it is no surprise that the North West is catching up London across the board surrounding alternative finance,” said Greg Carter, Growth Street’s chief executive.
“Manchester is the most likely to go somewhere other than a bank in the whole of the UK, and the rest of the region isn’t lagging far behind.
“Though banks are still the first port of call for SME businesspeople in the North West for their finance, if non-banking finance providers can build trust and continue to achieve meaningful partnerships with traditional banks, the figure will rise.”