Recent research suggests that UK-based small and medium-sized enterprises (SMEs) are set to benefit from the rise in popularity of alternative finance platforms (AFPs), as they can help alternative lenders to deliver funds at lower rates of interest more quickly than traditional lenders.
Moreover, research shows that AFPs are becoming more popular. The alternative finance industry grew 35 per cent year-on-year to reach a value of £6.2 billion in 2017, while separate research shows that the amount of loans and credit finance offered by traditional lenders in the UK has fallen by almost £6 billion in the past five years.
Currently, institutional lenders use AFPs to do the laborious work involved in issuing a loan, from origination through to final credit sanction. By using powerful technology to crunch key figures, such as management accounts, AFPs can inform an applicant very quickly about their chances of success. Then once an applicant receives an agreement with a lender in principle, there will be further meetings to discuss the nuts and bolts of the business.
This combination of artificial and human intelligence is slashing completion times and transforming the application process, and as there is a reduction in the time taken to gather information and fill in forms, management teams can focus on running their businesses.
Moreover, a business can cut costs by paying a flat access fee, usually without the need for an arrangement charge from the institution, and can opt for the AFP to perform due diligence in-house.
Nigel Fry, Partner at Milsted Langdon said: “It is positive to see that AFPs are on the rise and more SMEs are benefiting from them in the UK.”
“If are interested in AFP and would like advice on how to secure funding for your business then it is important that you seek specialist advice. Contact our experts today for a discussion on the options available to you.”