According to data published by the charity Nesta, University of Cambridge and University of California, Berkeley, alternative finance is an increasingly attractive option for those looking for new ways to secure finance rather than via traditional banks.

The survey found that the UK alternative finance market provided £463m worth of early-stage, growth and working capital to over 5,000 start-ups and SMEs in the UK between 2011-2013.

Equity-based crowdfunding in the UK grew by 618% from 2012-2013, while peer-to-business lending grew by 211% from 2012-2013.

The research team predicts that in 2014 the UK alternative finance market will grow to £1.6bn and provide £840m worth of business finance for start-ups and small and medium businesses.

Liam Collins, a researcher on the project and policy advisor at Nesta, said: “The data provides a timely snapshot of a booming UK alternative finance industry. Both the rapid growth and the diversity of this industry hold significant promise for the UK economy going forward.”

Julia Groves, chair of the UK Crowdfunding Association said: “The data proves that our sector is increasingly moving from “alternative finance” to mainstream “modern finance”. Crowdfunding is already providing real value in the provision of desperately needed capital in the engine room of the UK economy.

“With growing awareness and the advent of a new regulatory framework early next year the future looks extremely bright and the sector is primed to go on and completely replace aspects of retail banking”.

The figures on the size and growth of the alternative finance market are published ahead of the Financial Conduct Authority’s consultation on crowdfunding regulation which is due to close on 19 December.