Alternate Finance update
Many small businesses have taken on funding in the last two years that they may never have planned for. The need to survive the various lockdowns and closures persuaded many that a Bounce Back loan or CBILS was the way to go. The alternative finance landscape now though is changing.
We have several contacts in the world of alternative finance, and have collated below the latest updates to pass on to you.
The overall feeling is that lenders remain very keen to support businesses looking for funding.
Recovery Loan Scheme
Bounce Back loans and CBILS were replaced by Recovery Loan Scheme, which is due to expire at the end of June 2022. There’s no news yet on whether the scheme will be extended, although there may be an announcement as part of the Spring Statement on the 23rd March. The industry rumour mill suggests that it may continue in a lesser format or that some changes may be made. The consensus from our contacts is that it is likely to depend on demand and how much money allocated to the scheme is left in the coffers.
Revenue Based Finance
One of the largest groups of lenders emerging at the moment are revenue based finance providers. New entrants to the market are becoming more competitive. This could be a good option for e-commerce businesses looking to fund stock purchases and increase marketing. It provides a fixed cost and a repeatable credit line based on monthly revenue. In some cases they also offer e-commerce marketing insights and professional inventory advice. The logic for this is that more sales means they can lend more money, being a ‘win win’.
Once the funding option of last resort, it has been said recently that Invoice Finance ‘feels like it is making a come back’. Lenders are keen to win this type of business, which can be a good source of continuous cashflow for B2B businesses.
Start Up Finance
The Start Up Loans Company has now extended the maximum trading time from two years to three years. This will help those affected by the pandemic and potentially increase access to start up capital to many more businesses.
Asset Finance can be more flexible than other funding options. Lenders tend to be more accommodating of other debt in a business, less motivated to take Personal Guarantees and it can be used to release money from outright owned assets originally purchased from cash flow.
If you know you are likely to want or need finance in the coming months, hopefully this will be helpful. As ever, if you’re unsure or you’d like to know more, please get in touch!