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39% of brokers expect asset finance demand to increase in 2018

Almost two-fifths of brokers (39%) believe that demand for asset finance funding will continue to increase in 2018, according to the latest United Trust Bank survey.

A quarter (25%) expected asset finance demand from SMEs to stabilise, while 8% believed lending activity would decline.

Some 28% of brokers were unsure of what 2018 had in store and selected the “don’t know” option.

When asked which industry sectors were likely to drive demand for asset finance in 2018, brokers chose the construction industry as the most likely sector, followed by transport and waste management.

Martin Nixon, head of asset finance at United Trust Bank (pictured above), said: “There’s no doubt that awareness of asset finance is growing among UK SMEs.

“Lenders, brokers and industry bodies – such as the FLA and the NACFB – are working hard to spread the word about the versatility and flexibility of asset finance and how quickly and easily transactions can be completed.

“Dealing with a professional asset finance specialist is a far cry from what’s involved in trying to raise a business loan from a high street bank or applying to increase your company overdraft.

“Brokers have known this for years, but the message is now getting through to business owners across the country, and this is good news for everyone.

“The government’s push to tackle the housing shortage should mean that construction and housebuilding companies are kept busy for the foreseeable future.

“As a result, we also expect significant activity in the funding and refinancing of new and used construction plant and machinery.”

Source: Bridging and Commercial

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Pension funds, small businesses boost growth in UK alternative finance

LONDON (Reuters) – Britain’s alternative finance market grew by 43 percent in 2016, research showed on Friday, with interest from start-ups, small businesses and institutional investors helping to boost demand for services such as crowdfunding and peer-to-peer lending.

Last year, 4.6 billion pounds ($6.2 billion) was raised through alternative channels, up from 3.2 billion pounds in 2015, according to a survey of 8,300 investors and 77 crowdfunding or peer-to-peer platforms.

“Alternative finance has entered the mainstream and is likely here to stay,” said Byran Zhang, executive director of the Cambridge Centre for Alternative Finance (CCAF) at the university’s Judge Business School, which conducted the survey.

Approximately 72 percent of the year’s market volume, or 3.3 billion pounds, was driven by demand from start-ups and small businesses. That was up from 50 percent the year before.

 Peer-to-peer business lending was the largest market segment in 2016, growing by 36 percent to 1.23 billion pounds, providing an equivalent of 15 percent of all new loans lent to small businesses by UK banks.

Major banks reined in their lending in the wake of the financial crisis, and many small businesses complain of poor treatment and difficulty accessing funds.

Several alternative finance providers have sprung up to try to fill the gap, such as peer-to-peer lender Funding Circle, which announced this week it had lent more than 3 billion pounds to almost 40,000 businesses since its launch in 2010.

Another, MarketInvoice, offers peer-to-peer loans secured against businesses’ invoices and has lent 1.7 billion pounds since 2011.

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After peer-to-peer business lending, the biggest categories were peer-to-peer consumer lending, peer-to-peer property lending, invoice trading, equity-based crowdfunding, real-estate crowdfunding and reward-based crowdfunding.

Institutional investors including pension funds, asset managers and banks were also increasingly backing the platforms, the survey showed. Funding from these sources accounted for 34 percent of peer-to-peer property lending, 28 percent of peer-to-peer business lending and 32 percent of peer-to-peer consumer lending.

 Peer-to-peer lending can offer relatively high returns. Funding Circle, for example, currently boasts an all-time average annual return of 6.6 percent.

But the sector’s fast growth has also caught the attention of the Financial Conduct Authority, which is looking at introducing new regulation for the sector, highlighting concerns about past loan losses and due diligence.

This week, peer-to-peer lender RateSetter, the UK’s third-largest, reported a pretax loss of 23.7 million pounds after it took a hit from a bad loan.

Source: UK Reuters