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How to fund friends and lend to people: A guide to alternative finance

Until recently, 'alternative finance' was seen as something niche but this is no longer the case.

Recent reports from Nesta Understanding Alternative Finance and the University of Cambridge Pushing boundaries: the 2015 UK alternative finance industry report suggest that its uptake in the UK and internationally is growing, with the market expanding to £3.2 billion in the UK in 2015. These studies suggest that donation-based crowdfunding is the fastest growing model of alternative finance and that the biggest risk is platform fraud or malpractice, which means prior research is essential to understanding this fast-moving environment. If you're confused by what alternative finance is, don't worry. The ICAEW Library is here to help.

If you need a basic guide to alternative finance, Merchant Money's Ultimate Guide to Alternative Finance is a great place to start. It looks at different types of alternative finance such as peer-to-peer lending, crowdfunding, grants, venture capitalists, and business angels. The Financial Conduct Authority has recently announced that it is to scrutinise parts of the peer-to-peer business lending sector, as reported recently in the Financial Times.

In June this year ICAEW launched its biggest initiative in the area of alternative finance, teaming up with the British Business Bank and 21 other major business organisations to produce a new edition of the freely available Business Finance Guide ICAEW and the British Business Bank have also developed an interactive web site at www.thebusinessfinanceguide.co.uk which includes additional information and advice on raising finance.

ICAEW's Business Finance Guide

With thousands of British start-ups and SMEs turning to online platforms to raise finance, a coalition of major UK business organisations have launched a new digital guide on different sources of investment and professional advice.

Start your journey

The majority of alternative finance in the UK is aimed at SMEs. In 2015 20,000 SMEs raised £2.2 billion in business funding according to Nesta. TheCityUK has written a guide specifically for SMEs and mid-market companies, looking at the role that alternative finance can play in complementing bank lending to these types of company. The ICAEW Library also has a selection of books and articles about small business funding.

If you're looking at more general sources of finance for your company, head on over to the Library's page on Sources of finance for your business where you can access checklists, online articles, books and useful links. Many of these resources look at alternative finance. Or look at Venture capital and business angels, another useful page, especially for start-ups.

If you're still confused by the alternative finance landscape and don't know your cryptocurrencies from your crowdfunding, then contact the Library & Information Service – we can help.

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