Alternative lending hasn't completely lost its edge with investors. U.K.-based invoice and trade finance firm Reward Finance Group recently reported it had raised more than $51 million from Foresight Group.
An announcement made last week noted Reward Finance landed a secured loan note facility against the investment, which the company said will double its small business financing capabilities.
“Reward Finance Group has an exceptionally strong track record of profitable growth,” said Foresight investment manager Amy Crofton in a statement. “We have known the business for some time and have been impressed by its development over the last few years. Working with the Reward team, we structured a flexible debt facility that will provide substantial new capital resources to promote the ongoing success of the company.”
Before Foresight provided the investment, Reward Finance's sole investor was investment holding company Tradehold, which owns 70 percent of the company, according to reports.
“With Tradehold's financial support, they have built an innovative niche business,” said Dr. Christo Wiese, Tradehold executive chairman, “and with the Foresight deal, we now have the ability to grow this business even more strongly over the next five years, without our new financial services vehicle.”
The alternative lending industry in the U.K. has maintained much of its luster, despite excitement over the space dwindling in other markets like the U.S. Last year, regulators introduced new rules requiring traditional banks to refer small businesses to alternative lenders if they have been rejected for a bank loan, an effort to increase access to capital for small and medium-sized businesses (SMBs) and provide a show of support for the alternative finance space.
However, some research suggests that SMBs in the U.K. aren't well enough aware of their alternative finance options. A survey released last year by the British Chambers of Commerce found only 18.8 percent of SMBs said they were familiar with mezzanine financing, for instance, with peer-to-peer funding and trade finance also scoring lower in terms of familiarity among small businesses.