FMF.png
 
 

Cashflow Funding

A relatively new entrant to the world of commercial finance, cashflow funding is designed to either bridge short term shortfalls in cashflow (i.e. Corporation tax bill, VAT bill, unexpected repair cost or legal costs, deposit for new purchases etc.) or for longer term growth & expansion plans.

 
 
 
 
 

Shorter term facilities are referred to as revolving facilities, whereby the contract will be for a maximum period of 12- 24 months and will then ‘revolve’ on to another period. Expect to a pay a higher interest rate for these facilities (the best facility in the market will charge around 2% per month) as there is no underlying security over any assets of the business, making the lend riskier for the finance provider.
 
Longer term facilities are referred to as term loans, ordinarily with contract terms of 1-5 years. You will generally find that this market is led by the emergence of peer-to-peer finance providers, albeit many of these providers are moving away from their reliance on retail investment and heading towards institutional investment, which has made the availability of funds and the time to drawdown a lot quicker. This area of the market can be very competitive, with some providers offering annual rates of 5% for the better financially standing customers.
 
Another route is secured funding, whereby the finance provider will take a charge (either a formal charge or a unilateral notice) over a property, providing them the security required to make a loan to your business. You will generally need a maximum loan to value of 70%, meaning that the funder will advance up to 70% of the available equity in the property. This can be a very cost-effective way of raising a business loan, however bear in mind that there may be legal and valuation fees, added to that the application time (to loan drawdown) is often several weeks.

 
 

Cashflow Funding

A relatively new entrant to the world of commercial finance, cashflow funding is designed to either bridge short term shortfalls in cashflow (i.e. Corporation tax bill, VAT bill, unexpected repair cost or legal costs, deposit for new purchases etc.) or for longer term growth & expansion plans.

 
 
 

Shorter term facilities are referred to as revolving facilities, whereby the contract will be for a maximum period of 12- 24 months and will then ‘revolve’ on to another period. Expect to a pay a higher interest rate for these facilities (the best facility in the market will charge around 2% per month) as there is no underlying security over any assets of the business, making the lend riskier for the finance provider.
 
Longer term facilities are referred to as term loans, ordinarily with contract terms of 1-5 years. You will generally find that this market is led by the emergence of peer-to-peer finance providers, albeit many of these providers are moving away from their reliance on retail investment and heading towards institutional investment, which has made the availability of funds and the time to drawdown a lot quicker. This area of the market can be very competitive, with some providers offering annual rates of 5% for the better financially standing customers.
 
Another route is secured funding, whereby the finance provider will take a charge (either a formal charge or a unilateral notice) over a property, providing them the security required to make a loan to your business. You will generally need a maximum loan to value of 70%, meaning that the funder will advance up to 70% of the available equity in the property. This can be a very cost-effective way of raising a business loan, however bear in mind that there may be legal and valuation fees, added to that the application time (to loan drawdown) is often several weeks.