When an individual or small business was looking for a personal loan or a business loan, the first port of call was always to consider a bank loan from their local branch. But with banks reluctant to offer loans to many people who were previously considered credit worthy, many people are now turning their back on bank loans in favour of other sources for their loan.
Last year was the year of personal asset loans, whereby a person or business is able to secure a loan on property other than bricks and mortar, such as works of art, jewellery or prestige cars, according to the personal asset lending specialist, Borro.
Borro say they have seen a significant increase in their loan business, particularly through wealthy clients and small businesses who are looking or a good deal on a cheap loan and want to release the capital which is tied up in their possessions.
The personal asset lender has seen an increase of 122 per cent over the course of the past twelve months in funded loans, compared with the previous year. The average loan size has also increased dramatically from £3500 back in 2011, to £7,000 over the course of last year.
The value of business loans through asset lending to small firms, which accounts for the majority of Borro’s clients, has also increased from an average of £17,000 to £24,000 over the course of the past twelve months.
Paul Aitken of Borro said “2012 was the year the nation turned to alternative forms of loan despite various incentives designed to breathe life back into the loans market. The continuing growing demand for our service just goes to show that alternative forms of loans and financing are becoming more mainstream.”