If 2015 was the year when alternative finance asserted itself in the finance-provision marketplace, 2016 is set to be the year when it officially crosses into the mainstream.

Just before Christmas, the Asset Based Finance Association published data showing record use of invoice finance in the UK, and new figures from Liberum AltFi underline just how popular alternative finance has become. According to their new Index, crowdfunding platform lending to business rose by 75% in 2015, to £1.26 billion. This is a staggering increase that underlines the fact that alternative is no longer the right adjective to describe this kind of SME finance.

And the year ahead should generate the same kind of growth. The government is scrapping the ban on small businesses raising funds against unpaid invoices and is introducing a new statutory referral scheme that will require banks to refer businesses they turn down for funding to alternative finance providers. One of the consequences of the latter is that we should see more partnerships like the 2015 link up between Santander and Funding Circle. In addition, an Innovative Finance Isa is being introduced in April, which should further facilitate alternative finance sector expansion.

Raising awareness of alternative finance is vital and the coming together of mainstream and alternative providers will certainly help achieve this goal. And it is certainly a goal that needs to be achieved as SMEs continue to face demands on cashflow in relation to a wide range of issues, including auto-enrolment, data security, new technology and recruitment.

With doubts increasing over the country’s economic revitalisation, the role of financial stability becomes ever more important and valuable to small businesses. With another year of significant growth ahead, alternative finance is there to help provide that stability.

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