alternative lenders 39 Leumi ABL completes


£20m finance deal Leumi ABL has supported specialist recruitment business Rethink Group with a £20 multi-currency finance facility


Specialising in the IT sector, the AIM-market-listed £100m-plus turnover recruitment group is headquartered in central London. Its five subsidiary companies include one based in the Irish Republic. The £20m Leumi ABL invoice finance facility covers sterling, euro and US dollars, and further backing is in place from Bank Leumi (UK).


Steve Wright, CEO at Rethink Group, commented: “There were two principle reasons why we decided to do business with Leumi ABL. Firstly, on the ABL side, there was a willingness to embrace some of our key overseas locations, even though Leumi had no direct experience in those jurisdictions. Their approach was very much based on “...we understand what you are asking for, and we will find a way of providing you with a solution, rather than forcing you into a one-size-fits-all.


“Secondly, they took a very commercial approach to support our acquisition growth plans with non-ABL financing, demonstrating both a willingness to be flexible and a mindset of finding a solution that works.“


An alternative route to finance


The inflexible, rigid approach of the banks has left many Thames Valley businesses strapped for cash. Tracey Bevis, senior new business manager at Pulse Cashflow Finance, drives home the message that there is more than one route to funding out there


Put simply, unless a business is well established or of a certain size, a business overdraft doesn’t really exist anymore. Overdrafts, which are based on the historical strength of the firm, tend only to be on offer if a business is operating within a certain sector: “We don’t do construction” or “we don’t do retail” are stock phrases these days.


Jonathan Hughes


Jonathan Hughes, Leumi ABL regional sales director, added: “One of the key considerations in completing this deal was Leumi’s willingness to bring the client’s Irish company into the main funding facility, as well as putting in place future term lending for acquisitions. By working together with our colleagues at Bank Leumi (UK), we were able to structure a funding solution to meet the current and future needs of the client. We very much look forward to working with Steve and his team to support the growth ambitions of Rethink Group.“


Details: www.leumiabl.co.uk An alternative to alternative finance


The challenges faced by small businesses in accessing finance are well documented. And now the focus has switched to the alternatives to bank credit – such as crowdfunding, asset finance and invoice discounting. But another alternative – an option that 13,000 businesses turned to last year – is Community Development Finance Institutions (CDFIs).


These operate across the country and are specifically set up to provide finance for those who can’t access bank credit.


CDFIs are rooted in their communities and get to know their customers, understanding their business and their situation before assessing their financial needs.


It used to be the case that CDFIs helped the most risky parts of the market – sole-traders and start- ups. But they are increasingly also lending to SMEs, larger, more- established firms that no longer fit with mainstream banks’ criteria.


Last year CDFIs saw a 150% increase in demand from SMEs. And this demand has continued to rise – in the first quarter of 2013 it increased by a further 33%.


An injection of £60 million of capital for the CDFI sector – from the Regional Growth Fund, Unity Trust Bank and Co-operative Bank – is helping them increase the numbers of businesses they fund.


Details: www.findingfinance.org.uk THE BUSINESS MAGAZINE – THAMES VALLEY – NOVEMBER 2013


Bank overdrafts are invariably covered by director personal guarantees, supported by a second mortgage on the family home. Interestingly, the performance of the underlying business is frequently not taken into consideration.


As an alternative to business overdrafts, banks have subsidiaries that can take the risk of a business through an invoice finance or asset-based lending facility. Pricing is generally competitive at the upper end of the scale, for instance, a £10 million-plus turnover business. There is often a light touch to security and the business is usually left to run itself largely unhindered.


For less 'sophisticated' businesses with smaller turnovers, a more hands-on approach may be taken. The borrower may be assisted with collections as well as with credit management.


Invoice finance is now regarded as mainstream and factoring (invoice finance with credit control) is also provided by the banks as well as a plethora of independent factoring companies. Independents are more likely to provide a flexible, hands-on approach with a high level of service, which is convenient for SMEs in the Thames Valley area.


Independent providers also respond quickly to enquiries and typically provide a high degree of expertise and assistance. This can sometimes prove more expensive than a comparable bank offering, but higher levels of service are important.


At Pulse, we provide factoring facilities that are frequently based on a turnaround or a recovery position. In these scenarios, our service is not an alternative to high street lending, as it is highly unlikely that a bank will enter into a financial arrangement with a business that is facing financial challenges.


These difficulties may stem from bad debt or increased costs. Nonetheless, if the customer base is sound and the payment history is reasonably up to date, we will take a prompt decision. If the green light is given, we can provide finance against the outstanding invoices in a matter of days.


Thames Valley businesses seeking alternative funding should always do their research, speak to their advisers and see what alternatives are out there. Today there really is a choice that will suit the business.


Pulse has provided credit facilities up to £2m. So, the scope for doing business within the Thames Valley area is large.


Details: Tracey Bevis 0845-5397003 enquiries@pulsecashflowfinance. com


www.businessmag.co.uk


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