A rise in small business loans, and in particular asset finance, is behind strong Q3 performance by challenger bank Shawbrook, underlining the increasingly important role of alternative finance.

Shawbrook, one of a number of challenger banks to emerge in recent years, posted a 68% growth in underlying profit for Q3 2015, to £54.5 million, with asset finance a key driver. According to the bank, asset finance increased by 36%, to £126 million, in the third quarter. The news comes not long after Secure Trust Bank and Virgin Money challenger banks reported significant growth in small business lending.

The figures underline the role that alternative finance and services such as invoice finance, peer-to-peer lending and crowdfunding has in reinvigorating the SME sector and driving economic growth in the UK. After a long time on the periphery of the small business lending industry, alternative finance providers are now centre stage and taking on more and more responsibility for SME finance.

This shift has put the emphasis on raising awareness of services among SME business owners. Data from a new Exact 2015 SME Cloud Barometer study that shows UK SMEs are missing out on £25 billion in extra revenue because of a lack of investment in resources illustrates why educating businesses about their funding options is so important. If having the capital to afford expansion and extra expertise can make this kind of difference, then it’s vital that businesses know exactly what types of finance are available.

It is clear that the way businesses are thinking about finance is changing, with firms set up post-recession considering alternative finance services as anything but. The performance of challenger banks, including Shawbrook, is evidence of this trend.

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