Peer-to-peer business lending volumes have soared by a whopping 374 per cent over the past five years, the British Business Bank has found.
The state-owned economic development bank’s 2020 Small Business Finance Markets report showed how alternative finance has grown to help meet the needs of small- and medium-sized enterprises (SMEs).
“When it comes to external finance, smaller businesses have never had a wider choice of products and providers available to them,” said Keith Morgan, chief executive of British Business Bank.
“It’s really encouraging to see significant growth in the volume of funding for businesses that are looking to finance their growth ambitions.
“Although use of the many finance options available has significantly improved, disparities between UK regions remain.
“The bank will continue its work to support regional and local entrepreneurial ecosystems so that smaller businesses can thrive wherever they are.”
More than half (52 per cent) of smaller businesses that sought finance in 2019 contacted a finance provider outside of the ‘Big Five’ banks, the research found.
Over the same five-year period, gross lending to smaller businesses by the major banks has remained largely flat, with real term growth of just 1.2 per cent.
“Finance for small businesses is essential to our goal of making the UK the best place in the world to start and grow a business,” business minister Paul Scully said.
“This report will shape our support for business leaders across the country, so they can drive innovation and growth.”