As banks turn down applicants, more and more SME’s find themselves seeking new sources of finance. Peer-to-peer business lending from providers such as Funding Circle has become incredibly popular with lending upwards of £300m in the first half of 2014.
Samir Desai, founder of Funding Circle said, “Net lending to small businesses is still falling, which is disappointing given their immense importance to the economy. Traditional banks are hamstrung by legacy issues, limiting their capacity to lend.”
John Allan, national chairman of the FSB, added that the drop in figures was disappointing and the government should press ahead with reforms which will encourage non-bank sources of finance to increase competition.