Schroders has spent an undisclosed sum buying its way into Dutch direct-lending platform NEOS, giving the asset manager access to the non-bank lending market for small and medium sized businesses.

The FTSE 100 firm is the latest fund manager to flock to the direct lending space in the wake of rules introduced since the financial crisis, which have made it less attractive for banks to loan to businesses to the same degree they once did.

Assets in the industry have soared over the past decade as a result to $441bn by the end of last year, according to figures from Brown Brothers Harriman and data provider Preqin.

The non-banking lending phenomenon has grown rapidly in the US, where Oaktree Capital and Centrebridge Partners, among others, have been backing SMEs.

Meanwhile in the UK, Royal Bank of Scotland launched a joint venture with three major asset managers, Hermes, M&G and AIG at the end of last year, enabling mid-market sized companies owned by private equity sponsors to borrow up to £100m.

Under the deal with NEOS,  fund managers at Schroders will receive advice from the Dutch firm’s experts when it comes providing to finance to smaller enterprises.

Philippe Lespinard, Schroders co-head of fixed income, said only part of the non-bank lending trend is explained by the decreasing supply of credit by commercial banks.

“On the demand side, borrowers expect faster approval times and lower collateral requirements than afforded by banks’ traditional processes and systems,” he explained.

“These conflicting trends open up a space for non-bank actors to provide growth financing to SMEs on simpler and faster terms.”

“In parallel, sophisticated institutional investors are becoming more familiar with the concept of providing growth financing to SMEs in return for higher yields than are available in the public markets. 

“That interest is also coupled with a desire to make a positive social impact on the community by favouring local job creation."