The post-EU referendum marketplace is an uncertain one, but with invoice finance use reaching records levels, it is clear that as economic conditions stabilise alternative finance will play a key role in fuelling SME sector growth.

According to the Asset Based Finance Association (ABFA), asset-based lending by companies in the UK and Ireland hit £711 million in the first quarter of 2016. The figure represents a rise of 63% over the same period in 2015, which is the highest year-on-year rise since the financial crisis. Invoice finance represents the vast majority of this asset-based lending.

At the same time, UK equity-based crowdfunding businesses Seedrs and Crowdcube have announced major growth plans. The former will launch an investment eco-system in the Benelux region and the latter is rolling out a secondary liquidity market that it envisages will encourage further investment in UK businesses.

SMEs are a key driver of business sector growth and based on the news from the ABFA, Seedrs and Crowdcube, it is clear that alternative finance will be an important source of funding for British companies as they try to grow in the post-Brexit marketplace. Flexibility, affordability and accessibility will be vital and notably, a leading UK invoice finance company has reported a rise in enquiries since the referendum.

Alternative finance has taken on such a mainstream role largely as a result of the cautious approach to SME finance by traditional lenders. That said, there is evidence that this attitude is changing, with NatWest and HSBC recently announcing major small business funding programmes. The former has pledged £1 billion in funding to support small businesses in England and Wales with turnover of less than £2 million, while the latter has unveiled a $150 million funding line in partnership with Bibby. In addition, Santander InnoVentures, fully owned by Santander, has secured $100 million in funding for the UK fintech business community.

Market forecasts are a difficult business at the moment, but what is more certain is that alternative finance is going from strength to strength, and that services such as invoice finance, peer-to-peer lending and crowdfunding are integral to the performance of UK SMEs in the coming months and years.

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