Research by CreditPal has confirmed what the majority of SME owners already know - that many businesses are turning on friends and family or selling personal assets to raise finances.
Small businesses were found to have raised £45bn from alternative sources of finance over the last two years
Just over 40% of small and medium-sized firms sought alternative finance in the last 24 months, compared with 35% who applied for funding from a bank or building society.
Small businesses were found to have raised £45bn from alternative sources of finance over the last two years, £22.6bn of which was sought in the last 12 months.
Those sourcing alternative forms of finance have raised £66,624 each on average over the last two years, equating to £2,776 a month.
"We believe we have identified an SME fear factor at play, with companies more likely to seek finance from non-traditional sources because they are scared of even applying for finance from banks and building societies. We desperately need to see a return to traditional lending if the economy is to return to an even keel," said Chris Poll, CEO of CreditPal.
