Alternative finance holds the key to funding expansion for many small businesses, as access to funds from traditional lenders remains restricted.
According to a recent survey of 1,000 small business owners, almost one in three reported difficulties in securing business loans from banks, potentially halting their expansion plans.
Alternative finance, while available to all types of small business, is proving particularly popular with start-ups.
Worldpay’s research revealed that businesses under five years old are as likely to select alternative finance methods to secure capital as approaching banks.
Analysis by Worldpay of how these funds are used reveals that in 2017, direct investment in businesses, including stock purchase, expansion & refurbishment funds and equipment purchases drove 87 per cent of the cash advances.
Despite its growing popularity, the research also revealed that business cash advances are among the least known forms of funding, with only 2% of businesses indicating an intention to use this form of finance in 2018.
At the same time, business owners aged under 35 indicated they are more likely to place their confidence in alternative financing as a way to reduce their reliance on banks, with 40% stating its emergence will make things easier.