More SMEs seek Alternative Finance than a Bank Overdraft
Evidence of the increase in demand of alternative finance from small businesses just keeps growing. The latest findings from our Business Monitor research series shows that more small businesses in need of funding sought alternative finance rather than a bank overdraft in the last 12 months. And, only marginally more sought a bank loan.
The survey of 1000 small businesses found that, while 70 per cent hadn’t applied for funding because they didn’t need it, 30 per cent of those that did applied to an alternative funding provider.
This compared to 18 per cent that applied for a bank overdraft and 31 per cent for a bank loan. Just 15 per cent applied for a business credit card. The most popular alternative finance was peer-to-peer funding, followed by crowd funding.
Overall, nearly 7 in 10 (68 per cent) got all funding they needed, 21 per cent got part of it, but 10 per cent were still turned away causing cash flow problems and a missed opportunity for growth. Sixteen per cent of respondents didn’t apply for funding at all because they didn’t think they’d get it.
Other findings from the survey were:
The internet and social media were the most popular sources of funding information
The average time spent researching business finance sources is 3.5 hours
The average number of funders approached is 3
The average amount of funding required was £13,130
We’re pretty pleased with these findings. It shows that bank funding is losing its significance amongst small businesses as they become more aware of the range of non bank funding models available to them. As a sector though we must continue to improve knowledge and understanding; 9 per cent of those surveyed still said they hadn’t heard of or didn’t know what alternative finance was.
Onwards and upwards.