SME businesses have faced some really challenging times during the pandemic and the impression has been that there has been a limited appetite to lend. The reality has been with the ease of access to funds via the BBL and, to a lesser extent CBILS, borrowers have been, understandably, utilising these facilities.
The support that the government have provided has been both extensive and unprecedented in modern times. Figures from the British Business Bank (BBB) show 1.67 million business have been supported by the BBLS, CBILS and CLBILS, and £79.3bn of funding has been provided.
Recovery Loan Scheme (RLS)
Although these loans have now stopped there is still support being offered by the government in the way of the RLS. As with the previous schemes the lending will be delegated to accredited lenders, and whilst not restricted to loans this is what it is most associated with. Each accredited lender will all have their own criteria and requests will all be assessed in line with individual credit policies.
Whilst it is accepted that the profile of the government supported schemes has been very high, there is no doubt that at times they may not have always what the directors required. A review of the businesses by a professional who knows the market may well provide a better and more flexible solution, leading to a much more appropriate outcome.
Asset Based Lending (ABL)
In contrast the ABL market has remained open and has maintained their appetite and ability to support businesses. ABL has been a mainstream of business funding for many years now and can be used for several purposes from, improving cashflow to assisting in the purchase of new assets, business acquisition and shareholder exits. This form of finance has been adopted by many firms across the UK and remains an appropriate solution for many.
The term ABL is used to encompass several common assets that sit on the balance sheets of companies. The assets can be used individually or collectively to raise the capital required.
These asset classes can be used individually or collectively depending on the assets and the overall requirement for funding:
- Receivables
- Asset Finance
- Inventory Finance
- Cashflow Loan
The mainstream lenders remain cautious and have a narrow appetite to risk. The providers of specialist funding lines have a much more commercial approach to a business’s needs and can offer more flexible funding against the assets as businesses gear for the recovery period that we are in and the pressures this will place on cashflow.
Here are a few examples of the solutions we have been implementing most recently:
- £2m invoice discounting and £400k cashflow to construction recruiter
- £500k invoice discounting line secured for logistics business
- £1m property refinance done deal for pub chain
- £850k invoice discounting line with bad debt protection for security business
- £1.5m line for MBO of £15m turnover recruitment business
- £300k property finance for letting agent
If you’d like to talk to one of our team about your current options, book a call via our Calendly drop in clinic here or call us on 0800 993 0193.