UK200Group comments that the alternative finance sector is booming due to additional take up by SMEs

A member of the UK200Group of independent chartered accountancy and lawyer firms has today commented on news that the alternative finance sector is booming due to additional take up by SMEs.

New research from Amicus Finance Plc, a specialist in short term lending solutions, has estimated that the alternative finance sector could grow by almost a quarter (23%) this year due to demand from SMEs.

The same study also revealed that almost two-thirds of institutional investors (64%) believe that UK and European SMEs are too reliant on traditional bank finance.

Jonathan Russell, partner at UK200Group member firm ReesRussell, said: “The growth in alternative sources of finance within the SME sector is no great surprise. In reality SMEs are now doing what they should always have done, which is to examine their financing needs and borrow accordingly (structured financing) rather than – as always used to be the case – becoming reliant on overdraft facilities.

“It has taken changes by the main banks to make overdraft finance more difficult, and to a large degree them becoming less approachable for finance by SME owners, to prompt the SME sector to look at other sources.

“Now, like the canny shopper who searches the internet for deals, SMEs are exploring the financing market and finding solutions, which are more appropriate for their business. Many of these sources have always been there, but just ignored, whereas others are new to the market place. Having at long last discovered these other sources of finance, high street banks may find it as difficult as the major retailers, who are losing customers to the lower cost supermarkets, to recover the business they once had.”