A new study from an independent senior recruitment specialist firm, Tindall Perry, reveals that 74 per cent of finance directors describe their knowledge of alternative finance as average or above, yet only a quarter of them were comfortable accessing crowdfunding or peer-to-peer lending.
Over 83 per cent of finance directors approach their bank first for finance. This mindset means that traditional bank lending is still the only route to finance for the majority of the UK’s medium-sized companies.
Mid-sized and larger companies have always been the sweet spot for the high street banks, mostly due to that fact that they have the same underwriting costs for all deals and so they prefer and are keen to cultivate only the larger sized deals.
This means the huge growth in the alternative finance industry has been largely driven by the SME sector. In just over a decade the alternative finance industry has secured itself as a mainstream option for small business funding. If larger companies are to reap the benefits of this growing industry then the knowledge gap for finance directors needs to be addressed.
Tindall Perry’s ‘View from the Top’ survey collated responses from over 200 businesses to explore attitudes towards business funding. According to the firm’s MD, Leyla Tindall, the results underscore the fact that the awareness may be there, but financiers now need to boost the confidence of alternative funding options outside bank loans and overdrafts. “In recent years, the benefits of alternative finance have become increasingly apparent to businesses across the country, particularly when helping our SMEs to unlock growth. However, for most finance directors, that lack of understanding prevents them from accessing peer-to-peer and crowdfunding platforms, which could be having a detrimental effect on growth. Having the right management team and financial advice is crucial when it comes to accessing funding.”