More evidence that 2014 is the year of alternative finance: new data from the Peer-to-Peer Finance Association (P2PFA) show that lending rose by 121% in 2013.

The news comes only weeks after it was reported that alternative finance lending passed the £1 billion mark, underlining the rising popularity of non-bank SME finance such as peer-to-peer lending and invoice finance. According to the P2PFA, peer-to-peer lending to businesses rose to £843 million in 2013, with lending expected to pass £1 billion in the coming months.

With peer-to-peer lending due to become regulated by the Financial Conduct Authority in April, the alternative finance sector looks set for another stellar year during which it will increasingly become established as a mainstream small business lending provider.

This outlook is further buoyed by news that confidence is growing among SMEs in the UK. According to figures from the new Vistage Manufacturing Business Confidence Index, Britain’s manufacturing firms are gearing up for a great 2014. Over two thirds of companies polled expect the economy to continue to improve, while nearly half are planning to expand their workforce.

A new survey from the CBI shows the same sentiment: small manufacturers in the UK are set to increase investment in 2014 according to the report, with firms expecting domestic and export orders to increase over the year.

Clearly, if this optimism is going to be realised, SME finance has to be available to maintain cashflow and fund expansion. With businesses still wary of banks, alternative finance is flourishing, as the new peer-to-peer lending figures illustrate.

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