Brexit worries ‘turn SMEs to alternative funding’
Written by Chris Lemmon
Brexit uncertainty is causing UK business owners to look at alternative finance options, such as peer-to-peer lending, crowdfunding and business cash advances to support growth, according to a new Worldpay report.
UK small business owners have expressed concern that political and economic uncertainty could make it more difficult to secure funding in the future.
The survey of 1,000 small business owners found that more than half are planning for growth in 2018, but 52 per cent admitted that they are uncertain that traditional routes to finance, including bank loans, may not be available at the same levels in the coming year. Three in 10 respondents said that they have already encountered difficulties securing funding through these channels.
Forty per cent of younger business owners said the growth of alternative finance options has made them less reliant on banks for funding, with the research revealing alternative funding options are almost on a par with traditional bank lending in terms of popularity among startups and younger business owners.
While one in five of business owners aged 44 or under said they are still most likely to apply for a bank loan when looking for funding, nearly as many respondents (17 per cent) claimed they are more likely to look at crowd-funding, while 11 per cent prefer peer-to-peer lending, and six per cent said they favour business cash advance.
James Frost, CMO at Worldpay UK said: “Small businesses are the engine room of the British economy, so it’s very encouraging to see that so many of the UK’s entrepreneurs and independents are planning for growth. A lot of business owners will remember the credit crunch of 2008 and the difficulties they faced during that period. We’ve come a long way since then however, and today small business owners have an incredible number of options available to them in order to support growth.
“It’s important that small businesses familiarise themselves with the options available to them, so they can pick the funding route that best suits their circumstances. Banks do an incredible job in supporting thousands of small businesses every year, but the traditional bank loan may not be right for everyone.”