The funding landscape

Recent announcements have confirmed that the Government Funding for lending scheme hasn’t had as much of a take up as expected. The simple fact is that banks aren’t lending at the level they used to, or indeed if they do lend then the terms are quite severe, often onerous, which results in businesses not wanting to take up the offers. There is no doubt that the demand for business credit has slackened as funding sources tighten or close, but there are still many businesses wanting to grow or indeed take up demand from their customers and are struggling to do so. There are alternatives, and here are a few: We have seen a growth in active private investment from ‘investing Directors’ or Management Buy In candidates looking to be part of a growing enterprise and willing to acquire equity or loan money into these businesses. Often as part of a transaction where one of the existing shareholders leaves or takes partial retirement, they will also invest in an existing team to support its growth. They generally bring valuable expertise in growing businesses from their past work within management teams. Peer to peer lending schemes have popped up and several offer a useful platform for sensible growth proposals to be considered. They work with private investment on one side, and business credit proposals on the other and the lending scheme will then invite the investors to bid for part or whole of the credit requirement. They then receive an interest rate for the money lent usually at premium rates such as 10%+ as they are supporting a business often without a great deal of supporting security. Refinance of bank loans can also be made which can incorporate funding for headroom for investment and growth. We can help at MGroup Corporate Finance; call Mark Crossfield on 07780 957631 or m.crossfield@themgroup.co.uk