Recently published statistics indicate that only 34% of SMEs are using external finance, while only 47% are planning to grow in the coming 12 months. Could this indicate that SMEs are lacking the funding to expand? Or could it be that SMEs are lacking information regarding how debt finance could benefit their business?
Those SMEs who have borrowed in the last 12 months have generally used finance for expansion (29%), working capital (28%) or purchasing capital equipment (22%). In addition, around 2 in 3 of these borrowers have used finance provided by their main bank. 85% of SMEs are using finance provided by a company with whom they have an existing relationship, whether a bank or another provider. Contrary to the common media rhetoric, only 12% are being declined when applying - a real positive message.
One concern amongst the statistics is that only 4 in 10 businesses are consulting a professional advisor or finance provider about funding. This can be so valuable in finding the right structure and cost of funds. At Liquidity Club we have seen numerous businesses able to release far more cash, or save money, when moving to new providers compared with their incumbent provider. Yet only 7% of SMEs, in the statistics, have moved to a new provider in the last year.
Perhaps this highlights the need for more information being made available to directors of SMEs. Equally, it may be that increasing choice of providers, complex terminology and the number of different products can be confusing for those directors of SMEs. For any who agree with these sentiments, we would welcome a conversation about debt funding to break down some of these barriers.
All statistics sourced from BVA BDRC:
At Liquidity Club Mariana will be responsible for working with the existing Liquidity Club team to generate new business and assist businesses across the UK who are seeking debt finance to support growth.
Mariana Bloomfield, Business Analyst at Liquidity Club said: “I am delighted to join the Liquidity Club. I was looking for a new challenge returning to the financial services sector and Liquidity club peaked my interest. I have joined a forward thinking and innovative team that is making a name for themselves within the commercial finance world. Liquidity Club offers an interesting proposition as they seek to simplify the funding process and present impartial financial solutions that have been tailored to suit each individual business.”
Flylolo, a flight operator specialising in purchasing seats on ‘peak season’ flights and selling them to individuals and families at reduced rates, is flying high following the granting of a revolving credit facility provided by Reward Finance Group, with the help of Liquidity Club who facilitated the transaction.
Typically operating from smaller regional airports, such as Southampton and flying to Greece and the Canaries, Flylolo buys aircraft seats in bulk, as soon as they are released, in order to obtain the best prices.
Complex Cash Flows
Parisa Lian of alternative SME funder, Reward Finance, who arranged the credit facility, recognised the challenge for the company.
“As the awareness and reputation of Flylolo has grown, so have sales of its lower priced ‘holiday season’ seats. To satisfy the growing demand, the company needed additional cash to buy increasing numbers of tickets early in the season. With a relatively long period from purchase to payment means the amount of tickets they can buy is restricted by the amount of cash available. As a proven and growing business we were keen to help Flylolo enjoy even greater success by plugging the working capital requirement until payment for the seats is received.”
Managing director of Flylolo, Steven Dendle, who has extensive experience of the travel and airline industry, is looking forward to building on its success.
“Every year we hear about families who have to pay inflated prices to go abroad during the school holidays, whether it is Easter, summer or Christmas. Therefore the principle of our business is straightforward. By purchasing seats on flights in bulk, when they are at their cheapest, we can pass some of these savings on to our customers. Parisa and Reward have been a real asset to our team. I have been impressed with the way the deal has been structured by using existing assets to leverage cash. The new credit facility has allowed us to take advantage of purchase opportunities which are crucial to our business.”
Liquidity Club has arranged and advised an eight figure Asset Based Lending (ABL) facility for Rotherham-based Hatfield Energy to support the firm’s fast growth.
Hatfield Energy are on track to reach its forecast group turnover of over £30million at the end of its financial year in October 2018. Liquidity Club worked with ABN AMRO Commercial Finance (ABN AMRO) who acted as funders on the deal.
Firmly established as a family owned, pioneering Yorkshire business, Hatfield Energy has been based in Rotherham for over 45 years. It has evolved at a fast pace offering bulk commodity supply into heavy industry with an ever-increasing portfolio of secondary and virgin raw materials. Operating from a six-acre site, Hatfield Energy can accept and process thousands of tonnes of select bulk materials and industrial wastes. Resourcing, recycling and reusing industrial wastes and by-products from heavy industry has been a core part of the business for the last 40 years.
The business is today run by the second family generation of brothers, Grant and Mark Hatfield and employs over 40 people. It boasts many awards having recently been recognised in Yorkshire’s Fastest 50 Awards in 2018 (Yorkshire Post/Ward Hadaway) and in 2014 won a coveted Queens Awards for Enterprise – Innovation.
The ABL facility will support Hatfield Energy’s growth strategy which includes further expansion of its portfolio of products and capabilities. The facility was facilitated by Adam Simpson from Liquidity Club and has been provided by AMB AMRO. It works by accessing cash held within the debtor book and inventory assets, thereby giving Hatfield Energy access to working capital to support future growth.
Austin Thorp, ABN AMRO Manchester Sales Director said: “ABN AMRO is delighted to be able to support Hatfield Energy with its continued growth trajectory - a long established business with a strong management team, which we are confident can deliver its plan. Working in conjunction with the Liquidity Club, Hatfield’s funding requirement was clearly identified, and a suitable funding solution provided to meet their growing business needs.”
Birmingham manufacturer Burcas Ltd is focused on future growth after securing a seven figure funding package facilitated by Liquidity Club.
The finance, provided by Aldermore Bank, will assist Burcas Ltd to reach their target of growing turnover by 20% in the next year through their strategy to grow domestic and export sales with the latter predominantly focused across Europe as well as continuing activity in the Far East.
Burcas Ltd is a privately owned specialist engineering business trading on a global basis, supplying precision machined components across several key markets including aerospace, oil and gas and rail. Burcas Ltd was established in 1941 and today employs 60 staff. It entered into the aerospace market in 2000 following expansion of their CNC and precision machining capabilities. In 2015 significant re-development of their 35,000 sq ft site on Park Lane, Birmingham positioned the business for future growth.
Mark Williams, Regional Sales Manager, Aldermore Bank said: “Burcas Ltd is on a fantastic journey and has some exciting plans in the pipeline. We have worked closely with Mike and his team to provide them with a tailored package to suit their specific needs. We are delighted to be able to be able to provide continued support and look forward to helping them achieve their future ambitions.”
A poll conducted by American Express has found that 46 per cent of SME senior decision-makers feel cash flow struggles are distracting them from growth-related activities, such as product development or marketing. Furthermore, a quarter of respondents claimed cash flow issues were causing stress, or impacting on their sleep.
However, only around 50% of these businesses use an accountant or financial advisor to improve cash flow. Instead, short-term solutions are often deployed such as overdrafts or loans that are not structured to suit business needs.
Our consultative approach allows owners and directors to refocus on their core operations, whilst we analyse business needs and future plans to recommend an appropriate solution.
Contact us to learn more.
Cheap money driven by record-low interest rates over the last 10 years has left a crowded market for businesses seeking to raise debt finance. We still have the traditional banks and independents, now joined by countless small funds backed by wealthy investors and a growing number of peer-to-peer or platform-based funders.
This creates a problem
One in 5 businesses don’t know where to start when choosing a business current account, loan, overdraft or other financial products for their business.
Even more businesses - nearly 30% - claim the time needed to research the various options in a now crowded market presents a challenge.
Our team, with several careers worth of experience in business finance are discovering new solutions regularly.
Of course, once a business has decided on a small number of funders to talk to, there are multiple types to choose from - secured, unsecured, fixed-term, revolving - each of which has a number of products within. Unless you are an expert it can be overwhelming.
The British Business Bank has announced funding for startups in the UK. This fund is intended to fuel growth of the next 'unicorn' businesses - a startup with a valuation of over $1 billion.
The BBB will make £2.5 billion available, with £400m of early stage seed capital. The first of these investments have gone to venture capital firm Draper Espirit and the Dementia Discovery Fund.
Read more here
Liquidity Club and Bibby Financial Services have worked in partnership to assist a family-owned construction firm to achieve their growth aspirations and ensure a healthy cashflow strategy. This has been achieved through the provision of a £5million revolving cash flow facility that will make a real difference to their future success.
What did the customer need?
The client is a well-established operator in the construction sector and following a series of new business wins were seeking working capital to assist their cash flow requirements. The revolving cash flow facility will support new contracts and has specifically enabled the recruitment of more staff to assist more labour intensive projects and meet the immediate payment expectations of these staff.
How did we help?
The construction sector typically operates a minimum of 60-day payment terms which can squeeze many firms and affect a healthy cash flow that is essential to ensure the smooth running of any business and its future growth. Liquidity Club provided debt advisory support to the client, working in partnership with Bibby Financial Services who provided a £5million revolving cash flow facility to support their working capital needs. Bibby Financial Services understand the construction sector well and were well placed to assist this client, using their knowledge and expertise to structure the appropriate funding.
At Liquidity Club, we work closely with our clients and various funders to consider the best financial package that is tailored to the client’s needs. We aim to reduce the stress of approaching a number of funders by acting as an advisor for our clients and this is a great example of how the right results can be achieved to assist cash flow and provide a platform for future growth.”
“It also demonstrates our relationship based approach to funding and we were delighted to work with Liquidity Club in helping this ambitious business access the funding it needs to grow.”
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