Such has been the growth of the alternative SME finance sector in 2012 that many of its services have all but entered the mainstream. As 2013 approaches, we are on the brink of historic change in small business finance management, with invoice finance leading the way.

The last 12 months have been characterised by caution from traditional banks and building societies over small business lending. However, the reluctance to lend has helped drive the growth of the alternative SME finance sector and, in particular, services such as invoice discounting and factoring. These SME credit facilities have offered the flexibility and transparency that businesses haven’t been able to get from banks.

Looking at the growth of the alternative small business lending sector, expansion has occurred not just in terms of business use but also in terms of the diversity of services. Businesses can now choose from the likes of crowd sourcing, retail bond schemes, peer-to-peer lending and more. But one SME lending product in particular has driven growth and that is invoice discounting, an established product that many businesses are using in tandem with traditional banking services.

Of course, 2012 has also been a year of government initiatives to help boost SME lending. The year started with the dissection of the poor performance of Project Merlin, but has finished in a much more upbeat fashion, with backing for a British Business Bank that will reportedly incorporate third-party SME lending and bypass traditional banks and building societies. The jury is still out on the Funding for Lending scheme, in terms of improving lending to businesses at least. The fact that it is beginning to improve mortgage lending suggests that it should be given more time.

So, as 2013 fast approaches, it seems that we are entering a new era in small business finance, as more and more companies are integrating services such as invoice discounting and factoring into their financial strategies. The government’s failure to provide more details on the launch of the British Business Bank has generated some uncertainty but its recent backing of peer-to-peer lending suggests firm support for alternative business finance, something which, as many small business owners will tell you, is well overdue.

To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk.