Funding Solutions

Invoice financing enables businesses to borrow money against the amounts due from their customers, meaning they no longer have to wait until their customers pay their balances in full. It can also solve problems associated with customers taking a long time to pay, as well as difficulties obtaining other types of business credit.

A percentage of the invoice amount is paid as a fee to the lender for advancing the money. 

There are a few types of invoice finance available:

Invoice Factoring
Invoice Factoring is perfect for businesses facing cash flow issues or who are keen to grow. It works well as an alternative to loans, overdrafts or credit cards, removing the time between raising customer invoices and receiving payment. An added benefit to factoring is credit control, as most funders will provide this as an additional service.  

Invoice Discounting
Invoice Discounting is very similar to factoring, but differs in a couple of key ways.  Instead of submitting individual invoices to your funder, you can submit your entire ledger to receive an advance. Another key difference is the business is responsible for credit control, not the funder. This is extremely helpful if you have and wish to maintain relationships with your customers, or if you want your facility to be confidential. 

Spot Invoice Finance
Spot Invoice Finance is for companies who require funding on a single invoice, or possibly a couple of invoices. This is advantageous to business owners who potentially have a large one off invoice that requires funding, or those who need some temporary cashflow without being tied in to a long term contract. 

Asset finance provides funding that enables businesses to acquire assets, such as plant & machinery, equipment or vehicles. It can also help a business to release cash from the value of the assets they already own.

Asset refinancing
Asset refinancing is a loan secured against the assets owned by a business, such as plant & machinery, equipment or vehicles. 

Hire purchase
Hire purchase allows businesses to purchase assets via instalments. Items appear on the  balance sheet, with the business then having full ownership of the item at the end of the arrangement. The business is responsible for the maintenance and insurance costs.

Businesses can benefit from not only spreading the cost of an asset, but also from being able to adapt to their current circumstances. For example, a new business might lease a van, but by the end of the arrangement their business has grown significantly. The business could now get a larger vehicle, or increase their fleet size by obtaining a few more vehicles.

There are specialised lenders for all areas of asset finance, together with a variety of asset finance products available. The arrangements can be very flexible for businesses.  

Bridging loans are a short term property backed loan, often used to fund businesses or individuals whilst they are either in the process of refinancing to a longer term debt or selling a property.

The typical term for a bridging loan is between 1-18 months. The loan is then repayable in full at the end of the term. The monthly interest is usually included in the loan, so there are no repayments to make during the term. The need for bridging loans is usually very time critical, and lenders usually have a simple application process. Applications can complete very quickly, typically 5-14 days.

You can obtain a bridging loan against most property or land, for a variety of reasons, such as:

Funding restoration or conversion work, usually prior to sale or remortgage 
Buying a property quickly (e.g. at auction)
Preventing repossession

There are several options available to businesses when it comes to Business loans. There are many lenders who provide a range of loans. These can be high street banks, challenger banks, online lenders, even smaller local specialists.

Loans can be used for whatever the business requires, whether it be to fund a new purchase, expansion, refinance a more expensive debt or even a business emergency, such as HMRC debt. They can be either secured or unsecured. However, unsecured loans will typically require a personal guarantee. 

Much like personal loans, there are various eligibility criteria for business loans. This allows businesses with lower turnover, poor credit history or adverse history to obtain a loan. Each lender views these criteria differently, and the interest rate they quote can depend on the type of loan, term and their judgement of your risk profile.

Trade finance is the funding of goods for both domestic and international trade transactions. The trade finance provider will purchase the goods on behalf of a business, bridging the gap between paying a supplier and receiving payment from customers.  This makes trade finance a perfect funding solution for businesses who need to buy large amounts of stock to fulfill an order, without restricting the cashflow. 

Stock finance facilities let businesses release the value of their existing stock, helping to improve cashflow.  The amount of funding  available depends on the stock you want to release cash against. This could be finished goods, raw materials, or even work in progress.

Commercial mortgages are loans secured against a property. They are aimed at businesses looking to purchase a property or to release the value of an existing building. 

Typically there are no set rates, meaning that each application is reviewed thoroughly, so that the lender can properly assess the level of risk. The term can range from 3 to 25 years.

Lenders will require a lot of documentation when applying. These include profit/loss statements, tax returns, photos of the property, and a personal income and expenditure. 

Businesses that have adverse credit are able to obtain commercial mortgages. Similar to business loans, it may be harder to obtain due to this. However, there are specialist bad credit lenders who provide commercial mortgages in these circumstances. This may cause the interest rates to be higher.  

Construction finance is designed for contractors and subcontractors who are under a contract, framework agreement or purchase order. Funding is provided by advances against the value of invoices raised on the completion or part completion for staged contracts.

Some funders can provide funding at the point an application for payment is submitted, allowing businesses to know what funds are available during any contract.  This enables businesses to win new and larger contracts without the burden of loan, overdrafts or company credit card repayments.

Facilities can also be confidential, so customers don't know that funding is being used. 

Business overdrafts, much like a personal overdraft, provide a working capital buffer or safety net for businesses when required. 

Traditional business overdrafts from high street banks have become harder to obtain, especially for smaller businesses. 

However, there are very similar options available from alternative lenders. These help businesses to seek out new contracts or ease cashflow pressures.

Overdraft fees are only applied to funds used, so they can be used as cheaper safety net.