Small Businesses in UK Choosing Alternative Funding Sources

By Sierra Campbell, Managing Editor of small.news

(small.news) — Banks in the United Kingdom have increasingly been against providing funding for small business owners. Now, many of these owners are seeking alternative solutions.

Data from Grant Thornton showed that nearly 70% of small businesses in the UK have been avoiding banks. “As traditional lenders become more selective, businesses are increasingly turning to alternative funding sources for support,” the head of debt advisory at Grant Thornton, George Fieldhouse, said.

Small Business Owners in UK Choosing Crowdfunding, E-Commerce Platforms for Funding

Now, small business owners are choosing companies like Close Brothers and Bibby to help with invoice and asset finances. Crowdfunding platforms, like Crowdcube, are becoming extremely popular. Within the e-commerce space, PayPal has also been offering financing options.

After realizing how many options there are for funding, small business owners have reached out to brokers to help them. According to the National Association of Commercial Finance Brokers, intermediaries helped small businesses raise £26.5 billion in 2024.

The organization said, “A third of SMEs successfully funded had already been declined funding elsewhere.” The CEO and co-founder of re:cap, Paul Becker, added that small business owners “need support to put themselves in the right position to secure a positive lending decision.”

re:cap Creates ‘Capital Operating System’ for Businesses

According to Forbes, re:cap has created a unique approach to this problem—a “capital operating system.” This is an online platform where companies input their data to have the company’s financial strength analyzed. It will also show business owners how funding could improve their growth and where it can be allocated.

Once this is finished, these small business owners will reportedly have access to a £108 million credit facility.

Becker told Forbes that, even though the growth of alternative funding is welcome, many business owners don’t realize how much work it will take. “They are expected to commit to an extensive period of due diligence… with no guarantee of success at the end of the process,” he said.

Julian Schickel, a founding partner at Avellinia Capital, said that re:cap’s method helps fill a gap. “Traditional banks rarely lend to start-ups… companies and venture debt is usually only available for later stage companies.”

Avellinia Capital helps provide the credit facility to re:cap participants with HSBC Innovation Banking.