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• 01 Aug

  Lender Of Last Resort Or Alternative Finance

  Is being called a "lender of last resort" such a bad thing? Or should we be calling our products "alternative finance"? Some argue that these services are now too mainstream to be considered an alternative. Receivables finance has become a mainstay of business financing, alongside and often replacing traditional lending such as via an overdraft.

  Lenders Of Last Resort

  The term could be defined as a financier that is called upon only when the borrower can't get finance anywhere else. Often they are considered the last resort because either the terms are onerous or the price is higher than the norm.

  Aversion To The Term

  Back when I was working for factoring companies in the 80s and early 90s, there was a definite aversion to ever being referred to as a lender of last resort. The term harked back to how the industry used to be thought of, and the factors wanted to get away from that label. The term had been coined because often a factoring company was able to help finance a business that could not access traditional bank finance.

  That shift in perception has been largely achieved. Invoice finance has become much more mainstream, being offered by major banks and also seeing the product portfolio grow to include fintech offerings and highly selective, no contract style facilities. Also, rates have been reduced for many customers, as providers compete to acquire clients. Many funders have moved up the chain, seeking larger and larger lends, away from smaller deals.

  When we conducted research into barriers to using invoice finance back in 2015, only 8% mentioned reputation / last resort, as an issue, that figure may well have been reduced even further since.

  Unable To Get Business Finance

  However, there are a few providers on our panel that have actively migrated towards that niche of helping companies that have been unable to raise business finance elsewhere. Although perhaps not a huge niche, there is a steady demand and one that is grateful to be serviced by flexible lenders that can understand and work with people in difficult situations. We are pleased to have lenders on our panel that will deal with:

  • Prior poor credit history (both company and personal)
  • Non-home owners e.g. in rented accommodation
  • Companies with prior business failures
  • Companies with CCJs and HMRC tax arrears
  • Companies in CVA arrangements, or in imminent risk of insolvency
  • Loss-making businesses with a negative net worth

  Find A Lender

  The lenders always want to understand the circumstances, but there are very few situations - excluding perhaps deliberate frauds, that can't be overcome. In a world where credit scores seem to drive everything, not everyone has the perfect profile, and many are pleased to be able to find someone that can help when they are in difficulties. We are always happy to listen to your situation, in confidence, and we will be able to find a lender for most companies, regardless of your circumstances.

  Bank finance seems to be becoming harder to come by so companies that have exhausted all the traditional options of raising business finance e.g. bank overdraft, loans, crowdfunding, invoice discounting etc. may be relieved to hear that there are alternative lenders that are still likely to be able to help, and take a more flexible view.

  By Glenn Blackman