In Focus Risk
because they would simply provide security, rather than there being an investigation into their credit history.
True dialogue
An open dialogue around alternative finance and its growth in the coming year, will lead to a more comprehensive understanding you do not gain just a loan from an alternative- finance provider, but a relationship. Start-ups may know how to raise funding, but they often lack an awareness of where to find deals, and underwrite them. When an alternative-finance company partners with this kind of business, they do not just invest money, but they also invest into the firm’s success, and will nurture them on this path, in a way that banks do not have the resources to do.
This personal connection often means greater flexibility in repayment plans. Several lenders offer creative options, such as small daily repayments that adapt according to the business in question’s sale volume; meaning they can pay back what they owe in a manner that will not jeopardise their stability.
The boom we will see this year, in new alternative-finance products, will not just be attractive to those looking for a loan, but the lenders themselves.
In recent years we have seen a rising number of peer-to-peer lenders. Previously all of these were unsecured, and, as such, they were only able to offer investors 4% to 10% of the return annually. Now there are a rising number of secured options, which provide returns from 10% to 12%.
Conclusion
Overall, 2017 will not just be the year of alternative finance because it will see a pull- back in lending by banks and more options entering the market, resulting in uptake by new lenders, as well as the adoption by a broader range of business.
What will ultimately make 2017 the year for alternative finance is that we will see a rise in conversations around the subject, and a greater understanding of the benefits. Over the next 12 months, we will witness alternative finance become commonplace, and, with this in mind, our next question will be: can options, such as bridging, even be considered as ‘alternative’ anymore? CCR
March 2017
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