SMEs generally perceive credit conditions to be tight. They are worried that banks are reluctant to increase loans or overdrafts.

This is why they may turn to you for help. And this is why you need to be aware of alternative forms of finance to the traditional bank overdraft that are gaining in popularity.

If you have been tasked with sourcing business financing options for your clients, then here are 5 alternative routes to finance:

1.     Did you know that in the current climate, in comparison to the bank overdraft, invoice finance is a more readily available and flexible funding solution for many SME’s? 

Why? Invoice finance provides certainty of contract. Unlike a bank overdraft, invoice finance is not repayable on demand.

Invoice finance generates more cash than a bank overdraft – usually twice as much. Finance is based on sales. This is great for a business that does not have the time to keep going back to the bank, cap in hand to negotiate for more.

Whilst there is an argument that invoice finance can be a little more expensive than a traditional overdraft, most business-owners appreciate that it’s worth paying a little bit extra for greater flexibility and peace of mind. Some businesses even use it to obtain supplier discounts by paying them earlier.

2.     Did you know that your retail clients could raise finance against historic credit and debit card sales? 

This is an ideal solution for short term borrowing required to cover unforeseen expenditure. (Such as rent or VAT quarters, tax bills and PAYE etc.

3.     How to help your clients finance “one off” orders. 

Stock finance is short term and is revolving. And most importantly, it can be used to finance one off orders. If a business requires further cash, the facility can be repeated. So if your client needs a fast injection of cash, stock finance may provide the perfect solution.

4.     How to help your client finance the purchase of new equipment 

Did you know that a business could release cash tied up in its assets, such as vehicles, plant & machinery and even buildings?  This form of finance is typically known as asset finance. One of the main benefits of asset finance is that payments are fixed. Therefore as well as funding equipment needs, your clients also retain the ability to manage their cash flows.

5.     Did you know that many commercial finance companies offer single invoice finance or batch invoice finance?

Single invoice finance, sometimes known as spot finance, can be particularly useful for a business that relies on a single customer for cash flow. It can also be used to help fund a specific order that requires upfront costs. The opportunity to set up rolling contracts offers businesses flexibility.

Choosing the right sources of finance for a business is no easy matter. In the market there are a plethora of commercial finance lenders and business finance products available for your clients.  As a business finance broker I am more than happy to discuss any queries you may have.