The Changing Face of Lending
Let’s be honest, at some point most businesses encounter a cashflow issue, it’s a regrettable fact of modern day business life. Clients pay late, suppliers want paying up front and even the revenue aren’t now being as flexible as they once were.
The traditional way of tackling this was to pick up the phone to your friendly bank manager, have a chat about how things were going and then you’d ask them to extend your overdraft facility, which in most cases they promptly did. However times have definitely changed and banks just aren’t as flexible as they once were.
The turning point came in 2008 straight after the financial crisis and the businesses that suffered the most were SMEs. The banks stopped supporting this sector but thankfully the likes of ourselves at Balance for Business have been there to help, guide and support these SMEs through the tough times and out the other side.
At a recent business event held in Plymouth, our Managing Director Dave Ottley explained that in the last 6 months we’ve seen a 200% increase in applications and of the successful applicants, many have used the secured funding to support overdue invoicing and pressing HMRC repayments following a recent crackdown on businesses. This rise in enforcement has not only pressed businesses for more timely payments but it’s also prevented those businesses from using ‘funds due to HMRC’ to ease short term cashflow issues. Combined it’s just created an additional pressure on business owners in an already difficult environment.
Businesses that approach high street banks and explain this very situation invariably receive a lukewarm response at best and there’s certainly no immediacy to the situation if it were to progress to the next level or even to a decision maker. This isn’t what SMEs need, it isn’t what they want and it clearly isn’t what’s going to help them survive.
Commenting on the situation, Dave Ottley said: “When cashflow issues hit a business, timing can be critical so having to wait weeks on end for banks to make lending decisions can mean the difference between success and failure for applicants. Our approach to business lending is much more agile and responsive and in some instances can take just 48 hours to get the deal done. So when a cash flow situation does arrive, as it does for every business at some point, owners shouldn’t just look at traditional lending streams … they should talk to us at Balance for Business.”