One in six UK small businesses rejected for funding by mainstream lenders

Small business owners are turning to alternative finance such as crowdfunding thanks to “greater flexibility” and “ability to lend”

Around one in six (16%) of the UK’s small and medium-sized enterprises claim to have been turned down for finance by a mainstream lender such as a high street bank, according to a new study by Amicus.

This figure has increased by 5% on the 11% of small firms that were turned down for funding in 2015.

Almost a third (31%) of respondents said a lack of finance had resulted in them missing business deals or investment opportunities.

Given the rising number of businesses being rejected for funding, the report highlighted that small businesses are increasingly moving towards alternative funding options such as crowdfunding, property finance, invoice lending, and asset-based finance.

Small businesses said they were opting for alternative funding routes because of greater flexibility (51%), greater ability to lend (46%), and longer payment terms in comparison with traditional lenders.

Other reasons given for choosing alternative finance were speed (30%), specialist knowledge of their clients’ industries and challenges (29%), and more compelling payment structures (27%).

John Jenkins, CEO of Amicus, commented: “It’s clear from this research that the demand for alternative sources of finance is continuing to grow in popularity. Mainstream lenders are falling short in terms of the agility and speed that is required by small businesses seeking finance.”

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