A new survey from business lender ThinCats shows that only 31% of SMEs under 10 years old will approach their bank first when seeking funding, compared to 61% for businesses established between 10 and 20 years ago.
“Younger businesses are waking up to the benefits of looking beyond their bank. This may be because they are more open to trying new things, although we suspect it is more about the service-based nature of many of these modern economy businesses which do not fit the asset-reliant models of the traditional lenders.”, says Damon Walford, ThinCats chief development officer.
One reason can be that high-street banks traditionally focus on asset-backed financing that requires businesses to pledge a physical asset as collateral for a bank loan. While modern lending platforms are more focused on future cash flow of the borrower.
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