The rise of alternative finance means we're all winners, says GLI Finance

The stunning rise and exponential growth of the UK’s alternative finance industry has meant we’re all winners, according to Louise Beaumont, Head of Public Affairs at GLI Finance, investor in the global alternative finance sector.

Related topics:  Commercial,  Commercial finance
Amy Loddington
10th March 2015
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Speaking on a panel at yesterday’s Innovate Finance Global Summit 2015, Beaumont championed the increasingly important role alternative finance is playing in supporting SMEs by providing the fuel they need to grow. Beaumont argued that SMEs are the “engine room of the UK economy” and as a result, access to finance given to SMEs is of benefit to the UK as a whole.

Commenting Louise Beaumont, Head of Public Affairs, GLI Finance said:

“It’s no secret that SMEs are the driving force behind the UK economy, so we should be doing everything we can to support them. If we drive growth amongst SMEs, then the benefits will be felt across society via a more buoyant economy.”

When asked about the barriers holding back further growth of the industry, Beaumont was unequivocal as she highlighted the need for greater awareness of the industry and better understanding of the finance options available amongst SMEs.

Beaumont said: “Whilst the alternative finance industry has grown exponentially over the last couple of years, awareness amongst the UK’s 5 million SMEs remains astonishingly low. To make matters worse, SMEs often fail to identify the most appropriate type of finance for their bespoke needs, leading to a situation where many businesses end up with a ‘solution’ that does not best support their business.”

“Out of habit and a lack of wider awareness, many SMEs will also approach their bank as the first port of call in order to discuss finance options. The reality is that banks are set up to lend to  Industrial Revolution era companies with tangible assets to secure loans against, whereas millions of companies are now fundamentally knowledge economy companies, with IP assets, meaning banks are often ill-suited to best serve such businesses.”

“Government, the banks, and the alternative finance industry all need to do a much better job of raising awareness amongst SMEs about the variety of finance options available - from bonds to donations, to equity and invoice finance - as well as the channels through which they can be accessed. Failure to address issues of awareness and understanding means the alternative finance industry may fail to continue growing as it has, and the UK’s SMEs will not be able to access the finance they need, when they need it.”

Beaumont also dismissed the claim that banks should see SMEs as a direct challenge. Instead, Beaumont stated: “Firstly, alternative finance can provide banks with a referral option for the SMEs they can’t offer finance to. Secondly, banks, and other large institutions, can invest in the debt originated by platforms, thereby providing diversification and returns. Finally, banks can invest directly in companies providing the service and their technology.”

Beaumont finished by saying: “In my view, alternative finance has been mislabelled, as in reality it’s just ‘complementary finance’.”

Beaumont was speaking on a panel titled ‘Democratising finance: The rise of alternative finance in the UK’ and spoke alongside other panellists, Giles Andrews, CEO and Executive Director, Zopa, and Rhydian Lewis, CEO, Ratsetter.  

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