Lack of alternative finance awareness costs UK £20bn

Lack of alternative finance awareness costs UK £20bn




SMEs' lack of alternative finance awareness is costing the UK economy up to £20bn, according to specialist finance provider GLI Finance.

SMEs’ lack of alternative finance awareness is costing the UK economy up to £20bn, according to specialist finance provider GLI Finance.

In a report conducted with the University of Cambridge, the finance provider claims that 56% of SMEs are unfamiliar with alternatives to mainstream banks, with 80% of SME lending coming from traditional sources.

Dr Louise Beaumont, Head of Public Affairs at GLI Finance, said: “The industry has started to fill a vital credit gap as traditional lenders have retrenched from the market in the wake of the financial crisis.

“The alternative finance industry has achieved a great deal in a short space of time but it is imperative the government now leads the charge, supported by industry groups and industry itself, in order to ensure SMEs get the help they need to grow and that the alternative finance industry cements its position as a mainstream and complementary part of the financial services sector.”

The report argues that, because SMEs account for 65% of net job creation, a failure to increase awareness of different funding streams could hamper growth by up to £20bn as traditional lenders continue to cut financing to small businesses.

GLI Finance also accused traditional banks of putting the northern powerhouse at risk before it has even started.

Research from Funding Options, a GLI platform, found that SMEs in the North are having their overdrafts cut at twice the rate of London-based firms.

In October, a Competition and Markets Authority report found that traditional lenders were not doing enough to make SMEs more aware of funding options if small companies could not secure credit from the mainstream banks.

However, Bridging & Commercial reported earlier this month, that third quarter losses posted by the major banks would strengthen SMEs’ awareness of the alternative finance sector.

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