In a recent article for Forbes, Rebecca Bagley listed her top trends for small businesses to watch in 2015. What was at the top of the list, you might ask?
“Alternative Capital Flows Will Gain Traction.”
“First and foremost, small businesses need cash to grow. But the traditional lending market isn’t working for everyone. Therefore, it’s likely alternative flows of capital will gain traction in 2015, says John Spears, director of clusters and skills initiatives at the Small Business Administration. “2014 saw the emergence of new alternative flows of capital, which will continue to disrupt the market,” he says.”
Here’s to being disruptive! Merchant advance lending and other forms of alternative financing and funding were all over the news in 2014, and watchers of small business trends are buzzing about their potential in the coming year. In Canada, for example, the Globe and Mail published an excellent end-of-year list advising small businesses on key funding-related issues. Merchant Advance programs were listed among the most flexible and creative new options for funding.
The expansion of the alternative financing market is not just a local phenomenon. A Cambridge University report points out (via Reuters) that the value of alternative lending in Britain is set to double in the next year to a total of £4.4 billion.
“‘With bank lending to SMEs down again this quarter, it’s no wonder that alternative finance is fast becoming an important source of funding,’ said Liam Collins, a researcher at Nesta and co-author on the report.”
Even as far afield as South Africa, alternative lending is building support in the face of stricter regulatory policies and decreasing confidence among major banks. As CNBC Africa reported earlier this year:
“The tightening of banking regulations has also led to an increased focus on alternative lending options for consumers.”
“…Another space is niche non-bank lenders… we’ve definitely seen fantastic transactions that the banks can’t lend into or don’t want to lend into.”
We look forward to being a part of the evolving alternative financing space in 2015!