Archive for April, 2013

Alternatives to bank finance

Mainstream banks are limiting the amount they lend to small and medium sized enterprises as they face increasing pressure to strengthen their balance sheets.

Here are some alternative sources of finance for SME’s seeking cash:

  • Invoice Discounting – the funder lends you money against your sales invoices which is repaid when your customer pays you so overall it speeds up the money coming in to your business
  • Factoring – like invoice discounting but you also outsource your credit control to the funder & use their expertise to recover money owed to you
  • Greater use of leasing – there is a growing trend for leasing IT equipment rather than buying outright which is great for cashflow but also, plant & equipment & commercial vehicles are increasingly being leased
  • Use the business owner’s pension fund – SIPP (self-invested personal pension) & SSAS (small self-administered pension) pensions are increasingly flexible & able to buy business assets such as land & buildings thereby creating a cash injection for the business and a tax efficient rental income stream for the pension
  • Business Angels – average investments run at £35,000 and can typically last 5 to 8 years
  • Peer-to-peer lending – typically unsecured personal loans that are not made by traditional financial intermediaries such as banks but new specialist companies set up for the purpose
  • Government Schemes – the Goverment’s new Business Bank doesn’t deal with clients directly but works through existing banks and institutions. Also the Business Finance Partnership plans to generate £110m more lending to SME’s
If you are an SME in need of a cash injection to grow your business, contact us now for ideas how you can achieve that