Belfast Telegraph

There's never been a better time to seek alternative finance

By Andrew Gowdy, senior portfolio manager, WhiteRock

Business owners being caught up in daily operations often results in a time-pressured approach when considering suitable funding options for the business.

Outside of the traditional banking products, never before has Northern Ireland been able to offer such an extensive range of alternative finance options. These include products such as short and long-term loans, debtor finance, asset finance and equity, which we feel are no longer just desirable but in fact a necessity as a way of securing a healthy financial environment for a flourishing business.

Often the term 'alternative finance' is misconstrued. We tend to describe it as 'complementary to bank' finance. As such, there will always be a place for traditional bank lending. However, with risk appetite and flexibility often providing sticking points, business owners have now accepted that their funding package needs to include alternative finance to complement their existing banking facilities.

Taking the time to fully understand your options is a necessary step to ensuring that you don't waste time pitching for an unsuitable type of finance.

Working capital funding is instrumental to successful business growth. The old cliché that 'cash is king' cannot be underestimated. Cash is the lifeblood of any business and without it, operations, manufacturing and sales will grind to a halt.

Historically, Northern Ireland businesses typically operated with large overdraft facilities provided by the incumbent banker. This type of facility, however, has become a less favoured method of financing by the banks with a preference for secured term debt or debtor finance reducing their credit risk. Debtor finance is an excellent product for assisting sales growth as it prepays an agreed percentage of sales invoices providing an immediate release of cash.

The market now boasts a wider range of independent providers of debtor finance such as Upstream Positive and Close Brothers which is an increasingly popular choice for local businesses that may not be able to offer tangible security typically sought by the banks.

A popular and growing sector is 'peer-to-peer' lending. Simply put, peer-to-peer lending is the practice of lending money to individuals or businesses through online services that match lenders with borrowers. Popular platforms are Funding Circle and Assetz Capital and both have a presence in Northern Ireland.

There are also several privately funded lenders (with a local presence in the province through brokerages) such as Atom Bank, Relendex, Thin Cats and Dunluce Capital which have all completed a number of deals in Northern Ireland from cash flow loans to property development finance.

The Access to Finance initiative supported by Invest Northern Ireland offers a variety of support including start-up funding, loans and equity investment.

WhiteRock Capital Partners manages the £50m NI Growth Loan Fund (Access to Finance) which offers loans from £50k to £1.25m to local SMEs. With an extensive network of funding partners, we work hard to deliver the most appropriate support for local businesses.

We have and continue to assist numerous local SMEs with their growth aspirations and work alongside their primary banker and asset-based funders to meet the requirements of their cash flow.  We supported a large number of businesses in 2017 and early signs indicate that the appetite for funding will be even greater in 2018.

Andrew Gowdy is senior portfolio manager at WhiteRock Capital Partners

Belfast Telegraph

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