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Good time for Northern Ireland firms to look at alternative sources of finance

By Charlie Kerlin, Director of Corporate Finance at Grant Thornton NI

Small and medium sized enterprises (SMEs) in Northern Ireland have traditionally depended upon bank funding, through overdrafts and loans, to finance their business.

In Northern Ireland bank funding represents a significantly higher proportion of overall funding than other European countries and particularly the US, where it accounts for less than 30% of funding.

One emerging trend arising from the fall out of the credit crunch is that there has been a significant rise in the number of alternate funding providers. The alternative funders include asset based lenders (ABL), peer to peer lenders, private equity and venture capital funding.  Thus far the uptake of alternate providers has been relatively modest, however, particularly among Northern Ireland’s SMEs.

There is arguably still a lack of awareness, with many Northern Irish businesses unfamiliar with alternate sources of finance. However, there are also indications that the demand for and supply of finance is slowly improving. 

As the local economy continues to improve and business confidence is restored, we will see increases in the demand and supply of funding. It is a good time for quality businesses and projects to source finance. There is an appetite to lend. However, businesses may need to accept a cocktail of funding from various sources may be required rather than funding from a single source.

In the last 12 months Grant Thornton has undertaken over 100 meetings with different SMEs who have been discussing their growth plans with us, and seeking advice on securing the right type of funding. The meetings show the ambition of Northern Ireland businesses for growth but highlights that there is a need to secure appropriate advice to ensure that the business is investment ready and seeking funding from the most appropriate sources.

For further information Charlie Kerlin can be contacted at charlie.kerlin@ie.gt.com Grant Thornton (NI) LLP specialises in audit, tax and advisory services

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