Taking the alternative route to finance in Yorkshire

John Bevan

Flexible working capital can be crucial for SMEs looking to reach their goals and succeed as a business.

And there has been much talk of small businesses turning away from traditional lenders and looking at alternative funding streams in the wake of the financial crisis.

The commercial finance arm of listed Secure Trust Bank doubled its lending balances over the last 12 months, funding in excess of £1bn in customer invoices during that period.

Its interim financial results show that lending balances have risen to £187.5m in the year to 30 June 2018, up on the £94.2m seen the previous year.

Secure Trust Bank Commercial Finance offers a full suite of asset-based lending solutions to support growth, ranging in value from £1m to £50m.

It provides funding for a range of situations, including management buyouts and buy-ins, restructurings and turnarounds and service-led refinances.

In May, the company announced that it had funded more than £2bn worth of client invoices since inception in September 2014, which placed it firmly in the top 10 independent providers of alternative finance in the UK.

Since the start of the year, Secure Trust has worked on transactions across a broad range of sectors. This includes providing a £15m funding line to high street fashion chain Jigsaw, as well as a £35m facility to steel stockists Meridian Metals.

Commenting on the results managing director John Bevan said: “Alternative finance continues to represent an extremely attractive proposition for SMEs looking to unlock growth across the country, many of whom require a flexible and tailored proposition when it comes to funding.”

John Gribbon, Leeds based regional director of Secure Trust Bank, says: “Asset-based lending is becoming more mainstream; people are becoming savvier about it.

“We are sector agnostic. We look at the strength of the business and its management and we take a view on the sector. We also work closely with private equity and we have a strong pipeline.”

Nick Smith, sales and marketing director of SME funder Reward Finance in Leeds, believes it is time to drop the ‘alternative’ tag as asset-backed business funders compete head to head with traditional lending.

He says: “Asset-backed business funders, like ourselves, have become increasingly popular, as companies turn to us for much needed cash. And, we are now often the ‘first port of call’ for a growing number of companies.

“That’s because there is now a great deal more understanding in the marketplace about the funding solutions we offer.

“For example, the stigma that used to be attached to invoice finance has been removed.”

Leeds-based financial services firm Hitachi Capital reported its ninth consecutive year of profit growth in August, hailing a strong performance across its five key divisions.

For the 2017/18 financial year the group reported profit before tax of £116.4m, a 7.1 per cent increase on the previous year.

Hitachi generated £3.5bn of new business and ended the year with net earning assets of £4.8bn.

Its business asset finance arm saw a 4.9 per cent increase in profits to £21.4m, while its asset portfolio grew to above £1bn.

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