In the survey, 52 percent of SMEs view the benefits of alternative funding as more flexible funding, followed by quick to get, easy to apply for easy to get and offering better terms for their business. However, 44 percent felt it was only for businesses in trouble and 42 percent felt it was funding of last resort.
Opposing perceptions about the cost of alternative funding where close with 46 percent of respondents believing it to be more expensive than bank funding, and 39 percent feeling it was cheaper. On regulation, more than 2 in 5 businesses felt that alternative funding providers are less regulated than other funders, although nearly a quarter didn’t feel this was the case.
Awareness & understanding
The survey also found that more than four in five were familiar with the term alternative finance, but over a quarter admitted to not understanding what it was. Overall, 17 percent of businesses were not familiar at all with alternative finance.
Awareness and understanding was lowest among micro businesses, with only 32 percent, compared to 60 per cent of medium sized businesses, knowing and understanding the term. The most well known and understood funding platforms were peer to peer lending, followed by business cash advance and invoice trading.
Commenting on the findings, Liberis CEO, Paul Mildenstein says, “Despite its rapid growth and a much increased profile this year, understanding of alternative finance is patchy.
“It’s perhaps not that surprising this is still the case given the very diverse nature of funding models which have assembled under the alternative finance umbrella. However, this highlights a need to foster a deeper understanding of the distinctions and benefits of this type of funding if we are to unlock funding potential for all SMEs and not just pockets of the SME community.”
