The non-bank lending sector needs to be regulated – and marketplace lenders should lead the way

Having been spurned by banks, many small business owners are finding a funding lifeline with non-bank lenders. Specialist asset financiers, debtor financiers, factoring companies as well as an ever increasing number of marketplace lenders now offer a bewildering array of options to SMEs.

An unfortunate consequence of the explosion in the number of non-bank SME lenders is the emergence of some less scrupulous operators, which have been described as “payday lenders to SMEs”. SMEs are already falling prey to these lenders just as individuals continue to be caught in payday lending traps.