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Growth in mid-market fuelled by non-bank lending 13 June 2014

Mid-market businesses now have access to financing options that were previously only open to large corporates, according to research from Grant Thornton.

The research, of 100 mid-sized businesses and 100 non-bank lenders, found that four-fifths (79%) of respondents are “positively inclined” towards non-bank lenders – defined as “financial firms that lend to businesses, but do not accept deposits”.

Shaun O’Callaghan, UK head of debt advisory, at Grant Thornton UK LLP, said: “I believe this is a once in a generational change in the financing market. The proliferation of non-bank lenders has been a key driver of innovation and these firms are an exciting source of funding for mid-market companies.

“Previously, only large corporates could access products that brought a multitude of benefits, such as longer maturities and non-amortising tranches which allow management to reinvest more cash back into their business to grow.”

The research also found that when it comes to choosing a lender, the largest share of mid-market respondents (34%) identify access to capital as the most important factor, followed by terms and pricing at 23% and just 10% valuing existing relationships.

O’Callaghan continued: “For firms yet to use non-bank lenders, there still seems to be some education required on what benefits non-bank lending can bring and it is worth keeping in mind that corporate respondents in our study had resoundingly positive experiences with them.”

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