The survival rate for UK SMEs has reached a record level according to Barclays and the BGF Entrepreneurs Index, and among the factors helping the sector thrive is alternative finance.

Figures for the six-month period from December 2014 to June 2015 from Barclays and the BGF Entrepreneurs Index show that company dissolutions fell for the first time since the Index was established. The upturn in the survival rate has been attributed to an increase in business confidence, an uplift in the economy and the rise in entrepreneurs aged over 50. Alternative finance needs to be added to this list.

Alternative finance has become established as a front-line SME finance provider in 2015, with the popularity of invoice finance, peer-to-peer lending and crowdfunding services among SME owners soaring over the last 12 months. Hence, it is clear that the availability of these services, in tandem with a less cautious approach from traditional lenders, has played a part in the SME sector vitality reported by the BGF Entrepreneurs Index.

The role of increased diversity is underlined by data from a new Business Banking Insight (BBI) survey. According to the BBI report, almost a quarter of the 5,000 small businesses questioned said they were keen to consider new forms of business funding. Information and communications service SMEs were the most willing to think outside the box in terms of business finance. These figures follow findings from another survey that found that SMEs established after 2010 were displaying a much higher level of engagement with alternative finance.

It is encouraging for the outlook of the SME sector that the availability of alternative finance services is well established in the mindset of small business owners is, but there is clearly room for more growth. Raising awareness of alternative finance is essential to the health of the SME sector.

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