New EU Federation for Factoring & Commercial Finance figures show that asset finance is supporting 15% of business turnover in the UK, a rate comfortably above the European average.

Asset finance is playing a substantial role in the UK in absolute terms as well, worth €189.7 billion for the year to the end of June 2015. According to the data, asset finance provided 11% and 7% of support in France and Germany over the period, valued at €117.7 billion and €100.5 billion respectively. The Asset Based Finance Association puts asset finance use in the UK at £20 billion in 2015, with invoice finance representing 80% of the total.

These new figures further underline how alternative finance is underpinning UK business growth and how it is a vital source of finance for SMEs, either alongside or as an alternative to traditional lending. Alternative finance has moved into the mainstream with use of services such as invoice finance, peer-to-peer lending and crowdfunding reaching record levels. The beginning of the year has seen the usual avalanche of well-meaning articles boasting small business survival tips and while advice such as “involve your staff” and “be innovative” is good, it is also important to stress the importance of a solid, well-grounded financial strategy.

This need for a stable fiscal framework looks set to be more important than ever for UK SMEs in 2016 as they face headwinds in the shape of uncertainty surrounding EU membership, auto enrolment subscription and wider global economic softness, as well as continued caution from traditional lenders. As small business owners look ahead, they should be aware of the benefits of alternative finance.

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