SMEs know benefits of alternative finance but many still see it as last resort funding
A new poll of 1,000 small and medium sized business, commissioned by small business funder Liberis, shows that SMEs know the benefits of alternative funding, but many still see it as last stop funding.
In the One Poll survey, 52% of SMEs view the benefits of alternative funding as more flexible funding, followed by quick to get (46%), easy to apply for (44%) easy to get (41%) and offering better terms for their business (38%). However, 44% felt it was only for businesses in trouble and 42% felt it was funding of last resort.
Opposing perceptions about the cost of alternative funding where close with 46% of respondents believing it to be more expensive than bank funding, and 39% feeling it was cheaper. On regulation, more than two-in-five businesses felt that alternative funding providers are less regulated than other funders, although nearly a quarter didn’t feel this was the case.
Awareness & understanding
The survey also found that more than four-in-five (83%) were familiar with the term alternative finance, but over a quarter (28%) admitted to not understanding what it was. Overall, 17 percent of businesses were not familiar at all with alternative finance.
Awareness and understanding was lowest among micro businesses, with only 32%, compared to 60% of medium sized businesses, knowing and understanding the term. The most well known and understood funding platforms were peer-to-peer lending, followed by business cash advance and invoice trading. Equity crowd funding was the least understood platform.
Commenting on the findings, Liberis CEO, Paul Mildenstein said: “Despite its rapid growth and a much increased profile this year, understanding of alternative finance is patchy.
“It’s perhaps not that surprising this is still the case given the very diverse nature of funding models which have assembled under the alternative finance umbrella. However, this highlights a need to foster a deeper understanding of the distinctions and benefits of this type of funding if we are to unlock funding potential for all SMEs and not just pockets of the SME community.”
