What is ‘alternative’ finance?

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The funding landscape affecting small and medium-sized businesses has undergone some interesting shifts recently. While banks have become more conservative with their lending, there’s also been an upsurge in alternative finance options such as peer-to-peer lending and crowdfunding platforms. But are small businesses taking full advantage of all the options available to them?

The traditional route for an SME when looking to borrow money would involve a meeting with the local bank manager – if not relying on your own funds or family and friends – but since the 2008 credit crunch, it has become more difficult for small businesses to get finance through the traditional high street bank. Many SMEs fear they will not be accepted for a bank loan, perhaps because of lack of a track record or insufficient security to offer. Others might only approach one lender and if rejected, may give up on getting a loan altogether. With the latest figures from the Bank of England showing that lending to small businesses has flatlined in recent months, it is crucially important that SMEs are aware of the alternative finance options that are available to them.

Peer-to-peer lending, crowdfunding and asset financing are just some of the alternative finance options which have emerged in recent years, fuelled by the vacuum created by the credit crunch and the progression of online fintech solutions. Down here in Cornwall, The FSE Group has partnered with SWIG Finance to deliver The Cornwall and Isles of Scilly Investment Fund (CIOSIF). SWIG Finance has been around since 1989 and is arguably one of the first established alternative lenders, another pioneering first for Cornish finance.

The Cornwall and Isles of Scilly Investment Fund aims to transform the finance landscape for smaller businesses in the area and to realise the region’s potential to achieve economic growth through enterprise. This £40 million fund is aimed at Cornish SMEs and can provide eligible companies with growth finance starting from £25k. Access to finance is crucial to the growth of Cornish businesses and, while banks remain the dominant source of finance, alternative finance options such as CIOSIF can often offer small businesses more flexibility along with a relationship-based lending approach.

If you are a small business and are looking for growth finance perhaps to recruit new staff, rent new offices or land, purchase machinery, launch new products and services or to increase your sales and marketing activity, then make sure CIOSIF is your first point of contact. To find our more visit www.ciosif.co.uk or call 01872 306660.