Innovation Finance - Funding For New Start Up Businesses
FundingVoice magazine interviewed the Sales Director of Innovation Finance, one of our panel of invoice finance companies, about their funding solution for new start up businesses.
Q: Nearly a third of new start ups told our survey that they couldn't raise all the funding they needed - what alternatives are available?
A: Innovation recognised this gap and as such we are specifically looking to help this sector of the market by offering a tailor made solution to nurture small, growing businesses where other forms of finance may not be available. Its common for me to see new starts struggling with small amounts of traditional bank finance which are inadequate for their working capital needs and often require large amounts of additional security to get an increase. Our solution is the alternative.
Q: So what can you offer a new start up?
A: Our Small Business Invoice Finance product is the flexible alternative to bank lending, such as overdraft and loans, and it can be a massive help to businesses that are in their infancy. The approach at Innovation Finance is certainly not the norm. We don't go to see a prospective client and tell them what we can or can’t do. Our approach is to listen to what they need and mould our offering around them. We try to fit with what they want. We don't follow a "credit policy" style approach, which is common with other financiers, instead it’s a "can do" approach - which is rare these days.
Q: What is your stance on helping businesses with a previous poor credit history?
A: We look at the merits of every case and we understand that not everyone has a clean credit record. We apply a common sense approach and we work with the customer to understand the issues and find a way forward. We are currently looking to take on a couple of prospects who have historical business failures and CCJs - we try to help wherever we can.
Q: How do you respond to the 21% of new starts that told us they didn't consider invoice finance as they had heard that it was expensive?
A: We try to set our facility costs appropriately to be sympathetic to small growing businesses. We are highly competitive and in many cases cheaper than other independents or bank lenders despite our size. Even when we are compared to some of the "single fee" offerings that are available we are competitive and we charge no annual renewal fees and no arrangement fees.
Q: How would you answer the 37% of new starts that think that invoice finance is not an option that is available to them?
A: Its a common misconception! In most cases a new business opens a bank account and a loan or overdraft is the only option on the table. Even if the bank refers them to their invoice financing arm they are often told they are too small or they may only have a single debtor which may mean the bank can't help. We are different. We can fund single debtor situations, we don't insist on the customer taking out credit insurance on their debtors, dependent of course upon their ratings, and we will offer facilities to customers that are not homeowners, across a very broad range of industry sectors. We can also help with credit control or the customer can retain that function themselves if they are concerned about maintaining customer contact in-house.
Q: Why do you think only 2% of new start ups use invoice finance?
A: It reflects the lack of awareness of invoice finance as an option and the common misconception that its too expensive until you are an established business. Most prospects that I see are surprised and pleased that we can help where others have often turned them down. We enjoy a lot of gratitude from the business owners that we help as we are giving them the opportunity to achieve what they want and we like feeling part of their growing business.
Innovation Finance are a Sussex based independent invoice financier that help clients throughout England and Wales. They offer a personal service where the clients have a direct line to the management of the business in order to access quick decision making.