New data from the Finance and Leasing Association show just how much an impact alternative finance, and in particular asset finance, is having on the British business sector.

According to the association, asset finance lending stood at £23.9 billion for the 2013/2014 financial year, compared with £21.7 billion for the previous 12-month period. The figures illustrate the extent to which British businesses, including SMEs, are engaging with invoice finance and alternative finance in general as they look to raise start-up funding or capital to maintain cashflow.

It is not only this kind of data that underlines the vital role that alternative finance is playing in driving development at SMEs. The government is incorporating more and more elements of alternative finance into its SME lending initiatives. Most recently, the Business Secretary announced that the government will make £10 million available to small businesses to develop workforce engineering skills. Earlier in the year, Vince Cable said that the British Business Bank will guarantee the SME loans of one challenger bank.

The recent deceleration in the economy’s revival underlines the importance of nurturing SME growth. A new British Chambers of Commerce study has shown that SMEs will drive UK job growth over the next year, with over half of these companies expected to expand their workforce over the next 12 months. For this forecast to be realised, SMEs will need access to capital to fund growth, and alternative finance looks set to play a major role in ensuring this financial dynamism.

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