Non-bank SME lenders expect strong growth

COMPANIES offering new financing to small businesses are seeing strong growth in lending to firms that cannot get funding from banks.

Bluehone Secured Assets, which lends to small-cap companies, said yesterday that it plans to raise £40m by floating on Aim in order to build its loan book. It aims to make secured five-year loans of £1m-£3m to 15-20 companies in the next year.

And an online lending broker, MarketInvoice, recently reported a 10,000 per cent increase in its lending volumes to small and medium-sized businesses in its first year of trading.

The website saw investors lend £20,000 per day to firms through its auction system in February last year, versus £2m last month.

It comes less a week after Bank of England policymaker Andy Haldane suggested that online platforms could help spark a big expansion in non-bank capital markets for small firms, an issue examined recently by a government taskforce led by former Legal & General chief Tim Breedon.

However, at the smaller end of the market, data from non-profits that make loans to micro-businesses are becoming increasingly reliant on banks.