British Business Bank shows strong alternative finance growth
Research from the British Business Bank has shown small businesses in the UK are turning to alternative sources to obtain finance.
The 2018 Small Business Finance Markets report showed growth in equity and alternative finance, with the value of SME asset finance deals increasing by 17 per cent last year and peer-to-peer business lending and SME equity deals up by 51 per cent and 12 per cent respectively.
While there has been some improvement in the progress of the UK’s high-growth businesses, the report showed there needs to be greater availability of long-term patient capital to enable more start-ups to develop into fast-growth businesses.
The UK is behind the US when it comes to funding rounds, with the bank’s 2017 Equity Tracker showing UK VC funds stand at £118m, compared to £180m in the US.
While entrepreneurial activity was found to be strong in the UK, small business confidence has declined and demand for external finance has reached a record low with just 1.7 per cent of small businesses seeking new loans over the past ten quarters.
The report called for more information on finance options for smaller businesses that have growth potential. The British Business Bank is aiming to help smaller businesses seek finance that suits their needs through a new digital information hub, which is set to be launched this year.
Commenting on the report, Small Business Minister Andrew Griffiths applauded these smaller organisations, stating: “Small businesses are the backbone of our economy and this government’s industrial strategy is building a Britain in which they can continue to thrive.”
He added that while the report shows challenges remain, more small businesses are able to access funding from a broader range of sources. He also acknowledged the British Business Bank’s role in facilitating this. To make sure that these small businesses continue to have access to finance, the government will create a new £2.5bn investment fund by working alongside the bank.