Alternative Funding Is Simply Essential For SMEs And UK Growth


The Bank of England has published its Statistical Release for Money and Credit for December 2015. During the month, loans to non-financial businesses decreased by £3.7 billion compared to an average monthly decrease of £0.3 billion over the previous six month period. As a result of the sharp decline in December, the twelve-month growth rate in lending to non-financial companies was zero.


Within the overall figures, lending to small and medium-sized businesses (SMEs) declined by £0.3 billion during December compared to an average monthly increase of £0.2 billion over the previous six months. The twelve-month growth in lending to SMEs was just 1.2 per cent, well below GDP growth.

The average gross yield across Money&Co.’s book is running at 9.15 per cent

It should be noted that the Bank of England’s definition of an SME is a company with a turnover of £25 million or less. Many of the companies that approach Money&Co. for loans have turnover of £10 million or less and it is this segment of the commercial lending market that is particularly poorly served by the banks and this is not clearly reflected in the Bank of England data. Anecdotal evidence suggests that there is no shortage of good-quality small companies looking to borrow.


It is notable too that the last five loans that Money&Co. has funded have been transaction-based. It seems that the banks have little appetite for financing small management buy-outs and management buy-ins or acquisitions made by smaller businesses. This is a niche market that requires knowledge of how private equity deals work and Money&Co. has this expertise within the team.

Over the last 18 months, Money&Co. has lent just under £7 million to 20 companies with two companies having more than one loan, making a total of 22 actual loans. The average gross yield across the book is running at 9.15 per cent, which looks very attractive given that interest rates and inflation remain so low. During 2016, the number of loans available on the site will increase dramatically reflecting demand from good- quality companies and the greater availability of money to lend through the platform. Lenders will be pleased to hear that a new loan will be on the site in the next few days.

Alternative lenders like Money&Co. are helping to make much needed funding available to Britain’s SMEs. If the recent economic growth is to be maintained, then it is essential that these businesses have access to funding.


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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.