Want evidence of the growing popularity of alternative finance and the importance of its role in providing access to SME finance? The Asset Based Finance Association (ABFA) has it.

According to the Association, asset-based finance secured by companies in the UK hit a new high in the last quarter of 2014, reaching £19.4 billion, an increase of 9% over the same period in 2013. This announcement comes hot on the heels of news that the government’s Growth Vouchers programme has handed out only a tiny percentage of its budget since its launch at the beginning of 2014. The underwhelming performance of the Funding for Lending Scheme is well documented.

Interestingly, according to the ABFA, there is an additional £20.5 billion of unused facilities available to small businesses. The statement underlines the potential for the alternative finance sector to grow further – despite the success of services such as invoice finance, peer-to-peer lending and crowdsourcing, the sector remains a minority player in terms of market share.

However, that could change in the short-term, in particular if traditional lenders and the government continue to integrate alternative finance services into their SME finance provision strategies. There is also the prospect of more specialised SME banks.

Based on recent evidence from eBay, there is a growing appetite for these services. According to a new study on online business sentiment from the online corporation, more and more businesses are ditching traditional lending services: 75% of small businesses questioned said that they no longer rely on support from their bank. We should expect more positive news from ABFA throughout 2015.

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