Univsity of Cambridge and Nesta present research report “UNDERSTANDING ALTERNATIVE FINANCE - The UK Alternative Finance Industry Report 2014”

The University of Cambridge and Nesta, supported by ACCA and PWC, have undertaken an extensive research , which is the largest study of the UK alternative finance industry as at November 2014.

The research report is title “UNDERSTANDING ALTERNATIVE FINANCE - The UK Alternative Finance Industry Report 2014”.

 

The UK’s alternative finance market – which includes crowdfunding, peer-to-peer lending and invoice trading – is set to reach nearly £2 billion by the end of 2014, and is expected to double in 2015, as businesses increasingly seek more efficient ways to raise funding.  Alternative finance covers a variety of new financing models which connect people seeking funds directly with funders, often through online platforms. The majority of these providers have been founded in the last five years. Regulation of parts of the industry was introduced by the Financial Conduct Authority (FCA) in April 2014, and in October the UK Treasury launched a consultation on a proposal for an ISA for peer-to-peer lending.

In the first three quarters of 2014, alternative finance platforms facilitated loans, investments and donations worth £1.2 billion, with the amount predicted to reach £1.74 billion by the end 2014. The researchers predict the amount will reach £4.4 billion in 2015.

 

The report shows: 

• Peer-to-peer business and consumer lending continued to dominate the market with £749 million and £547 million being lent through the models respectively in 2014.
• Equity-based crowdfunding reached £84 million, up 201% year on year.
• The alternative finance market has more than doubled in size year on year from £267 million in 2012 and £666 million in 2013, to £1.74 billion in 2014.

By the end of the 2014 it is expected that the UK alternative finance market will have provided more than £1 billion in business finance to over 7,000 small and medium enterprises in the UK, the equivalent to 2.4% of all bank lending to SMEs. In the last quarter, bank lending to small and medium-sized enterprises was down by £400 million, according to the Bank of England’s latest

Trends in Lending

 

44% of SMEs surveyed were familiar with at least one type of alternative finance, but just 9% had approached an alternative platform for finance.

 

Over half (58%) of UK consumers surveyed were aware of a type of alternative finance, with more than one in seven (14%) saying they had used an alternative finance platform to seek, lend or donate funds. 

 

The report is the result of a collaboration between Nesta and the University of Cambridge, with support from PwC and ACCA.

  Read the University of Cambridge’s research note regarding this report “Alternative finance market set to double in 2015” here

 

Download the report in PDF format here