Alternative Funding Healthy Ahead Of Brexit

A dozen shiny pound coins on a table.

The UK's crowd lending and alternative finance sector has enjoyed a strong 2017 and recovered well from last year's referendum.  As governments prepare to begin Brexit negotiations, we look at recent reports on the health of the sector.

In May,  research by RateSetter Business Finance didcovered with over 400,000 small businesses now interested in finding an alternative to the banks for a loan. Miranda Wadham wrote in Investment Observer that SMEs preferred personal relationships at a time when banks were closing branches and cutting headcount.  Around the same time, Welkom reported research by TSB Bank that suggested the UK consumer market was 'broken', with consumers feeling 'punished' by the banks.

So... canalternative lenders step into the fray? It looks as though they are doing. The smart people at Money&Co.  alteted us to this remarkable news: "the specialist lending market continued its post-referendum recovery between January and May this year with a continuation of the confidence seen in in the second half of 2016."

The underlying research was done by Livingstone Partners, a firm of debt advisory specialists based in London. If you want the full story, they ask you register for their newsletter. We were impressed by the overview in Mortgage Finance Gazette, which tells us that "the 15 publicly-quoted lenders surveyed reported an average growth in loan books of 24% year-on-year, with average returns on equity remaining attractive at 19% (post-tax)."

"Growth equity funding for disruptive business models with a focus on online and apps continued to be active, with specialist lenders, mortgage brokers and new lenders driving the growth in the sector."

Although the UK tech industry has been airing its concerns,  Investor Magazine reports that acquisitions of ‘UK centric’ businesses, whose operations are unaffected by the European Union, are also likely to continue at the current pace" and Verdict tells us that Chancellor Philip Hammond has reaffirmed his aim to support startups once Brexit gets underway.

We're aware that research being published now probably won't take account of people's responses to the shock (for most of us) General Election result. But perhaps it's not such a bad time to be alive, after all.