Non-bank alternatives are becoming an increasingly important source of finance for some firms, according to the Bank of England.
The statement came in its quarterly report on trends in lending, in which it noted that the majority of small firms found the availability of credit was either ‘poor’ or ‘very poor,’ and that around half of small businesses the bank spoke to believed credit was unaffordable.
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Despite this, the Bank noted: "Credit conditions had improved for firms of most sizes over the past quarter, though conditions remained tight for the smallest businesses."
As a result of these tight conditions, the Bank reported that some SMEs were looking at alternative finance providers, however it failed to specifically mention asset finance, instead choosing to highlight peer lending and crowd funding, despite the recent growth in asset finance.
The bank also reported that demand for bank lending has increased ‘significantly’ across all company sizes in the previous quarter.
This growth was spurred by a number of reasons, including a rise in mergers and acquisitions.
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By GlobalDataWhile overall demand for credit was increasing, the proportion of SMEs not seeking finance was noted to have increased steadily over time, and was 82% in the first quarter of 2014.
