The finance market is ever-changing particularly among younger, more modern businesses who are shunning the traditional High Street banks in favour of alternative finance providers.
This the finding of survey of 512 small businesses carried out by ThinCats, a fintech lender to mid-sized SMEs.
The survey found that of businesses less than ten years old, only 32% would consider their bank to be their first port of call. This contrasts with businesses over 35 years old where 71% would default to their main bank. When it comes to working with an alternative finance provider, 23% of younger businesses are more likely to feel comfortable with this approach compared to 4% of the oldest SMEs.
Not surprisingly, where decision makers were aged under 35, 65% said a traditional High Street bank was not the first place they would go for funding. This contrasts with decision makers aged 55 and over, where it was just under 30%.
Sectors such as IT, telecoms and marketing, which are traditionally knowledge or service-based are those leading the way in moving towards alternative finance providers.
Worryingly, 30% of SMEs who were rejected by their first-choice lender, stopped searching for external funding altogether. This suggests that many businesses, of whom 55% said high street banks were the first lender approached, are potentially giving up when there are suitable alternatives available.
This demonstrates that more still needs to be done to highlight the range of alternative finance providers in the marketplace.