Over just the couple of weeks I have seen a number of stories from different Asset Based Lenders (“ABL’s”), suggesting they are benefiting from the banks apparent continuing reluctance to lend any money to businesses.
Asset Based Lenders are those that traditionally base their lending on sales receivables (debtors / sales ledger) finance products – factoring / invoice discounting etc., however it is often the case that their offerings go much further than just that, but the receivables is normally a prerequisite.
There is certainly an increasing amount in the press, and other evidence, to suggest that despite all the Government incentives and the real need for lenders to be sensible, they are simply not giving what might be quite good propositions any consideration at all. A survey from our friends at Venture Finance recently suggested there had been an almost three fold increase in the number of businesses being refused credit by banks and other traditional lenders, now reaching 58% of all propositions.
Our own experience is similar, with the need for bricks and mortar security seeming to be a prerequisite before a discussion can even begin!
It seems that the press from the “independent” ABL’s is that they are gaining from this market, and picking up new business which may have otherwise gone to the banks. By independent I mean those ABL’s that are not bank branded, as even some who are not these days are ultimately owned by the banks. Our experience certainly has been that bank owned and branded ABL’s have similar criteria to the banks themselves, the independents are often much more creative. However, that said we have seen even their lending criteria tighten and a much stronger desire to see protection of some description or other (security, credit insurance, etc.).
What does this all mean? If you need funding for your business you may have to think a bit outside the box, but also accept that you not only need a first rate case, with a strongly supported business plan etc., but that you may have to put your house on the line to make it happen. There are though alternatives to the high street banks if they refuse to play ball.
Interesting times …
