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More funding options for mid-market companies

Fast-growing mid-market businesses now have the opportunity to access financing options which were previously only open to large corporates, according to new research from Grant Thornton.

Direct lending into mid-market companies was driving innovation and building a new asset class for investors, the business and financial adviser said.

Chris Frostwick, practice leader for Grant Thornton in the East Midlands, said: "I believe this is a once-in-a-generation change in the financing market. The proliferation of non-bank lenders has been a key driver of innovation which we are currently seeing across the East Midlands.

"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."

Grant Thornton's 'Capital for Commerce' research revealed 79 per cent of respondents are now positively inclined towards non-bank lenders.

The survey of 100 UK mid-market companies and 100 non-bank lenders also showed that when it came to choosing a lender, the largest share of mid-market respondents (34 per cent) identified access to capital as the most important factor, followed by terms and pricing (23 per cent) and just 10 per cent valuing existing relationships.

Out of the sources of non-bank finance available, over half of companies (56 per cent) have used credit funds. This is followed by private equity firms with a direct lending arm (49 per cent), junior debt funds (40 per cent) and asset-backed lenders (39 per cent).

However, hesitancy still exists, as only 21 per cent of those mid-market corporates which have not yet used non-bank lenders would consider doing so in the future. Reasons for this reluctance included perceptions around high rates of interest.

 

Source: Insider News Midlands

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