Alternative funding has been a major talking point over the past few years amid strict bank lending practices. As we reported last year, explosive growth in non-bank funding is creating a 'new normal' in SME lending patterns, as ambitious businesses increasingly opt for alternative funding methods to drive their expansion plans.
As a prime example of the healthy development of alternative finance, one peer-to-peer lending platform is experiencing impressive growth - and has just announced a £3.5m seed funding round.
Lending Works, which was launched in January 2013, matches lenders with personal loan borrowers under a three-fold protection system, which provides safeguards to lenders and offers competitive deals to borrowers with flexible terms.
Driven by tech
The system has been developed by founders Nick Harding and Mathew Powell, and is the latest in a series of fintech (financial technology) investments announced in London.
Lending Works is an online marketplace that utilises innovative technology to match lenders with borrowers, meaning applications can be completed within 15 minutes and loans can be secured within just two days.
This advanced online platform takes the non-bank model a step further, and means small businesses or entrepreneurs can secure much-needed finances on a peer-to-peer marketplace faster than ever before.
While this presents excellent funding opportunities for SMEs, quick-fix lending solutions are constantly under scrutiny, and this online approach raises questions about integrity and regulation.
Specifically, will the use of new technologies, which offer fast access to peer lending, open the doors to new online platforms that aren't properly regulated?
As with any market there is always a risk of exploitation. But financial expert Adam Tavener believes that the alternative funding market is in better shape than ever before: "With the economy on a more stable footing, the FCA now up and running and the regulatory hawks circling the whole of the financial industry to keep it in line, the funding scavengers have been more or less picked off, leaving a healthy and innovative alternative funding sector."
The future of alternative lending
This topic is just one of many that we'll be discussing at this year's BCA Conference. Guest speaker Justin Urquhart-Stewart, financial expert and founder of Seven Investment Management, will shed light on the industry and offer advice to delegates on business funding methods - including that of peer-to-peer lending.
One thing's for sure, this market certainly isn't showing signs of slowing down. In an interview with FT.com, Andy Haldane, executive director of financial stability at the Bank of England, believes peer-to-peer lending is at the heart of a major shake-up in banking: "At present, these companies [peer-to-peer lending companies] are tiny… But so, a decade and a half ago, was Google."
Join us on Thursday 22nd May 2014 at BCA Conference and discover what's next for the alternative funding sector, and how your business could benefit from a market that's helping to redefine the world of business finance.