Alternative Business Finance - Guest Blog, Mark Jefferson
Since Britain plunged into recession in 2008 businesses have found it harder to gain the funding they need via traditional lending.
Long gone are the days of unsecured loans and overdrafts, where the bank manager was a respected figure and trusted adviser to the SME they are now the figureheads of an industry that is now widely reviled. The banking sector has been the subject of much media and political scrutiny and while the stories of “fat cat” investment bankers are certainly not helping the UK banks image most small business owners are more concerned about what is happening at their local branch.
Over the last four years business funding has dried up businesses are having to scale back their plans for future growth or abandon them altogether as the banks are unwilling to lend. After countless attempts by two governments to kick-start lending when you talk to the average business owner, it is clear that funding is still almost impossible to find. With many business owners’ still believing that their banks are the only option for finance when they are unable to gain funding via the bank then they look no further meaning that vast numbers of SME’s in Britain are running without the funding they need and are unable to grow.
Thankfully, though, the bank overdraft or loan is no longer the only available means of funding for businesses in the UK. Now, firms of every size are free to take advantage of alternative finance options such as Invoice Finance and Asset Finance. Many of the other options available are more affordable, more flexible, and more business-friendly.
Invoice Finance allows a business to release funding against the value of its sales ledger and can be run on a disclosed basis or confidentially so customers are unaware of any funding facility. Invoice finance improves company’s cash flow by unlocking the money tied up in the existing debtor book and can be used to support growth, fund a new venture or acquisition and even raise capital to purchase stock or plant & machinery. In comparison to a traditional bank overdraft or loan Invoice Finance is more flexible and as the funding is based on the businesses sales then as the business grows the funding grows with it.
Another alternative form of lending is Asset Finance, releasing money from existing assets or funding the purchase of new or used assets such as plant, machinery, vehicle and property. There are several ways asset finance can be used; whether it is to generate funding against existing assets through refinancing or requirements when structuring repayments with the option of retaining ownership of the asset or to sell the asset and then lease it back.
Neither of these forms are finance are new and both are offered by various high street banks, however thousands of cash starved business across the UK are unaware that there might be some other options for them to inject some funding into their business. These are just two forms of “alternative lending” with many different options available provided by both independent and bank backed lenders then it is vital that SME’s find the financial support they need and if the banks cannot provide that, then businesses should look elsewhere.
Mark Jefferson offers a free consultation to anyone interested to explore the possibilities of alternative funding. Click here for contact details.
