According to Lloyds’ biannual Business in Britain report, UK business confidence is at a 22-year high. But what will turn this optimism into real growth? For more and more companies, the answer is non-bank finance.

Hot on the heels of Santander’s deal with the Funding Circle, evidence of the growth of non-bank finance, including invoice finance, peer-to-peer lending and crowdfunding, and its establishment as a mainstream SME finance service continues to grow.

New figures show that applicants for the Enterprise Investment Scheme, an equity funding initiative, rose by 16% for the 2013/2014 tax year. The scheme, which gives investors tax breaks for investing in SMEs, raised more than £1 billion over the period.

Elsewhere, the government has released data showing that the British Business Bank lent almost £800 million to over 30,000 SMEs in the last financial year, with 55% of funding dispersed through non-bank finance products. In addition, the end of June saw the latest FAC-authorised crowdfunding investment platform, Volpit, come online.

Momentum is building in the SME sector, but access to small business funding remains an obstacle to development. As 2014 progress, it is clear that the key to unlocking this potential is non-bank finance. Whether used in conjunction with traditional SME lending services or alone, more and more SMEs are using it to drive growth.

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