With so many lenders on the market it can be difficult for borrowers to understand the vast array of financial products available for their businesses.
The field has increased with Peer-to-Peer (PTP) lenders making their presence felt. However, with a couple of high profile failures and struggles, there has been a degree of negative publicity.
There is often little love lost between the PTP and traditional lenders, but both should acknowledge that each has learnt from each other. PTP lending is known for its speed of execution and customer service, but now it is also incorporating aspects of traditional lending (meeting clients, tempering the reliance on algorithms etc.)
To learn more about invoice financing, read our article: Could invoice financing be the solution for you and your business?
For brokers committed to servicing their clients, the increase in PTP lending options has been greatly welcomed. More products have been added, with the two most significant additions being single invoice lending and working capital finance.
Single Invoice Lending
Single invoice lending is quite simply invoice financing against one invoice at a time. The benefit of this is that the borrower is not locked into a contract. The downside is the cost, but this is mitigated when the use of the facility is occasional and brief. Flexibility suits many borrowers who can be prepared to accept a premium when they are not feeling beholden to a contract. A typical client will be a production company committed to a specific large project for a blue-chip client, where there is a concentration of resources as well as a pressure on cash flow
Working Capital Finance
Working Capital Finance is a relatively new development and a very welcome entrant into the market. Here the lender looks at the overall balance sheet and will take into account previously unconsidered factors, such as Work in Progress. This gives the lender flexibility to go a little further than invoice finance lenders who are constrained by the actual invoicing. To give examples, it is a form of lending which has proved suitable for Accountancy firms and Advertising Agencies.
We should welcome change and competition. Many UK businesses complain that they cannot find the right lenders, but it is often the case that they have simply not been provided with the right guidance.
This article was contributed by Philip Lewis, Director at Lewis Link Limited. If you would like to discuss your requirements, please get in touch with Philip at firstname.lastname@example.org or on 07775 540242.Back to top