What are non-bank lenders?

A non bank lender is a non-traditional source of finance (i.e. not a bank).

INFOGRAPHIC: Non-Bank Lending Institutions for Small Business Loans

This infographic explains how non-bank lending institutions offering non-bank small business loans can help grow the UK’s SME sector.

Small Business Loans from Non-Bank Lending Institutions

The last decade has seen a shift in the UK lending market – from a healthy lending market to a far more cautious banking sector. This leaving the country’s small to medium businesses with a funding gap.

To fill this gap, the British Government initiated campaigns to increase the prevalence of non-bank lending.

The Government’s Industrial Strategy green paper of January 2017 states: “We must ensure that businesses across the UK can access the finance and management skills they need to grow; and we must create the right conditions for companies to invest for the long term.

It worked!

The UK saw an increase in non-bank lending institutions providing small business loans:

  • 12% increase in asset lending in 2017
  • £3.3 billion – the asset finance market’s third highest monthly new business total (achieved in March 2018)

In January 2019, 49% of British SMEs said that they would go somewhere other than a bank when seeking a business finance provider.

  • 35%  said that they have considered non-bank finance in the past (up from 30% in 2018)
  • 66% said they had some knowledge of finance outside of banks (up from 54% in 2018).

Why the shift towards non-bank lending institutions?

  • 35% of SMEs find accessing bank finance a challenge
  • 100,000 SME applications for loans are rejected each year
  • The vast majority of consumer loans are now made online, and the trend is taking off for business loans.
  • Risk aversion of the big banks.
  • Banks ask for too much security.
  • Needing a minimum number of years’ accounts and profit history can be prohibitive.

Non-traditional lending is:

  • Fast
  • Flexible
  • Affordable
  • Accessible

Different forms of non-bank lending:

  • Soft and hard asset based finance
  • Peer to peer lending
  • Crowdfunding
  • Invoice finance
  • And more

The UK’s SME sector needs to thrive

  • 14% – the UK economy’s growth since 2010.
  • 5.7 million (99%) – UK business that are SMEs.
  • The UK ranks 3rd in the world for the number of start-ups.
  • BUT only 13th for the number of businesses that successfully scale up.

Why are SMEs failing to scale up?

  • Lack of traditional access to funding.
  • Under-supply of long-term funding and later stage venture capital.
  • SMEs don’t understand all the options when it comes to non-bank lending institutions.

Timely access to non-bank finance can transform small businesses

Access to finance from non-bank lending institutions is the key to unlocking their growth potential.

  • There are now a lot more options available to small to medium-sized businesses.
  • They have access to varying types and terms of finance.

Small businesses can use a non-traditional loan for:

  • Asset purchases
  • Recruitment
  • Investment in research and development
  • Cash flow loans
  • Second mortgages

69% of young people dream of owning their own business. Affordable, responsible finance can turn these dreams into reality.

Smarter Business can help small businesses get the capital they need, when they need it. Find out more about non-bank lending institution loans today. 

This infographic provides more information about non-bank lenders:

Infographic - Non-Bank Lending Institutions