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Small businesses are turning to alternative finance while planning growth in 2018

Many UK businesses are turning to alternative finance options with many planning to grow business further in 2018.

According to a Worldpay survey of 1,000 small business owners, more than half say they are planning for growth in 2018 but as many as 52% of start-ups and early stage business owners admit they are concerned that traditional routes to finance, including bank loans, may not be available at the same levels in the coming year. Nearly a third (30%) say they have already encountered difficulties securing funding through these channels.

Rather than put their ambitions on hold however, Worldpay found small business owners are increasingly looking at alternative financing options, such as peer-to-peer lending, crowdfunding and business cash advances to support growth.

Forty per cent of younger business owners say the growth of alternative finance options has made them less reliant on banks for funding, with the research revealing alternative funding options are almost on a par with traditional bank lending in terms of popularity among start-ups and younger business owners.

While 21% of business owners aged 44 or under say they’re still most likely to apply for a bank loan when looking for funding, nearly as many respondents (17%) say they’re more likely to look at crowd-funding, while 11% prefer peer-to-peer lending, and 6% say they favour business cash advance.

James Frost, CMO at Worldpay UK said: “Small businesses are the engine room of the British economy, so it’s very encouraging to see that so many of the UK’s entrepreneurs and independents are planning for growth. A lot of business owners will remember the credit crunch of 2008 and the difficulties they faced during that period. We’ve come a long way since then however, and today small business owners have an incredible number of options available to them to support growth.”

Worldpay found that while younger small businesses owners are comfortable to shop around for finance outside of traditional channels, older business owners were far less likely to consider alternative financing options over a traditional bank loan, leaving them potentially vulnerable should lending levels drop. 

Frost continued: “It’s important that small businesses familiarise themselves with the options available to them, so they can pick the funding route that best suits their circumstances. Banks do an incredible job in supporting thousands of small businesses every year, but the traditional bank loan may not be right for everyone.”


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