Competition from alternative lenders driving growth in business lending
Competition from alternative lenders is driving banks to boost lending amounts for businesses, according to Conrad Ford, Chief Executive of SME finance aggregator Funding Options.
Barclays and NatWest/Royal Bank of Scotland are among the banks that are boosting access to finance for SMEs.
Competition from alternative lenders is thought to have been the driving force behind Barclays’ decision to increase its lending amount to £100,000.
Commenting on the trend, Ford stated that there is growing competition in this sector, adding that Barclays is not the only bank that is taking action, with RBS/NatWest launching their Esme loans service, a digital lending platform that enables SMES to access unsecured loans of up to £150,000.
Ford added that banks are asking themselves why such propositions are attractive to customers, stating that the lending is not necessarily cheaper but the services are transparent, fast and easy.
He suspects that the trend of increasing unsecured business loan amounts will continue, which could create challenges for peer-to-peer lending firms, which compete especially well in that area. However, he does not believe that P2P lenders will be too affected by the increased competition from banks.
Christopher Guttridge, Product Manager of P2P business finance provider MarketInvoice, commented on the relationships between alternative lenders and banks, stating that he expects to see more collaborations between them.
“Another way that banks can and are looking to better serve the UK SME market is by partnering with these same lenders,” he said, adding that Santander’s partnership with online fintech company Kabbage is an example of this.