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Alternative lenders outscore banks on flexibility, service and speed, say small firms

By CreditMan Tuesday, June 30, 2015

  • Top five factors making alternative lenders more attractive than traditional banks are greater flexibility, greater ability to lend, better customer service, specialist knowledge and speed
  • Around 950,000 small businesses have considered using alternative finance over the past five years

As mainstream banks continue to face growing pressure from the alternative finance industry, a new study by Amicus Finance Plc (“Amicus”), a leading specialist in short term lending solutions, reveals the key factors driving small businesses towards alternative lenders.

According to the report, nearly half (45%) of small business owners believe that alternative lenders offer more flexibility than banks, while 37% said they have a greater ability to lend. A quarter (25%) of small firms believe that alternative lenders outscore banks on customer service, specialist sector knowledge (24%) and speed (22%).

The research shows one-in-three (32%) or around 720,000 small business owners have lost out on a deal or investment opportunity because their bank was unwilling to service their borrowing requirements.

As dissatisfaction among small firms with mainstream banks continues, almost two-thirds (64%) of SMEs predict that demand for alternative finance will increase over the next two years.

According to the report, over four in ten (42%) or around 950,000 small businesses have considered using alternative finance over the past five years with the most popular types including crowdsourcing, invoice finance / factoring, commercial mortgages and asset finance.

John Jenkins, CEO of Amicus commented: “When it comes to servicing the needs of small businesses, alternative lenders are outscoring the banks in many crucial areas such as flexibility, quality of customer service and speed. Many small firms tell us that speed of execution can make all the difference when there’s an opportunity on the table that needs a quick turnaround. Given the challenges faced by banks in recent years, it’s little surprise that many small business owners feel they’ve have missed out on exciting deals and growth opportunities due to a lack of support.

“Most business owners who have turned to alternative lenders discover that dealing with them is a breath of fresh air - and that’s why they are continuing to gain popularity.”

Amicus offers short term, property-based lending solutions to private and corporate borrowers which include landlords, developers and owner-occupiers. Earlier this year Amicus announced the acquisition of City-based brokerage Norton Folgate Capital Group Limited and is committing significant working capital and resources to build the Norton Folgate business over the next five years.