New figures show that the alternative finance market continues to grow. And with new invoice finance legislation in the pipeline, use of this service and others is set to increase further. Alternative finance is fast becoming indispensable for small business owners.

The latest edition of the Invoice Finance and Asset-Based Lending Update from UK Finance reveals a 5.6% increase in asset-based lending to £4.3 billion at the end of Q2 2018. At the same time, the number of businesses using the facilities rose by 1.1% to 40,333, the highest quarterly level recorded since 2015.

Interestingly, the number of businesses with a turnover of more than £10 million using invoice finance and asset finance increased to over 5,000 compared with the same quarter in 2017, while the number of small business benefiting from such services remained steady.

Looking ahead, if the government’s latest piece of small business legislation is passed, the number of small businesses using invoice finance and asset finance could grow larger yet. The Small Business Minister Kelly Tolhurst has announced new laws that will make it easier for small firms to access invoice finance. The new legislation proposes to arm small businesses against unfair contracts that stop them raising capital from unpaid invoices.

The Minister has suggested that the laws, should they successfully pass through Parliament, will give the economy a £1 billion long-term boost. The small business sector, which comprises almost six million firms, could certainly do with such an injection.

At present, these companies are fighting some serious headwinds, most notably in the form of Brexit-related market uncertainty and a ranch of policy and non-policy costs. Tellingly, according to new research from Hitachi Capital Business Finance, the number of small businesses forecasting growth for the next quarter has hit its lowest level for more than a year. Furthermore, the number of small business owners fearing the collapse of their companies has doubled.

In the wake of prolonged caution from traditional lenders, the likes of invoice finance, asset finance, peer-to-peer lending and crowdfunding are offering small business owners an alternative means of accessing essential funds. These services are providing a lifeline for small businesses and, as the figures above suggest, this help has never been so critical.

This is how a Sussex small business used peer-to-peer lending, through a commercial finance broker that specialises in alternative finance, to raise the capital to buy new equipment.

As the small business sector and the UK economy enter a critical phase, it is essential that small businesses owners receive all the help they need to support their companies. Alternative finance is becoming an increasingly important part of this help.

To find out more about A&T Business Associates services, contact Steve on 01903 602211 or steve.bowles@atbusinessassociates.co.uk