The apparent fantastic variety of funding options available to SMEs would appear vast but knowing how to navigate the marketing material and understand what you may be getting into is another matter entirely.
Before the internet and the death spiral of relationship bank managers, life was relatively straightforward. You had a relationship with your bank manager who got to know you and your business. They generally had local lending discretions and therefore the bank would be able to say yes or no relatively quickly and if it was a no, they could signpost you to someone who could help.
Of course, a lot of lending requests that banks receive are really ‘equity risk’ rather than traditional bank lending opportunities and SMEs struggle to understand this. Many times we hear ‘my bank won’t support me and I have a profitable business!’. The reality is that in many cases, the customer is asking the bank to take equity risk on a bank facility. That is why the ‘unsecured’ business loan providers who are appearing to be very free with their money ALWAYS take a full Personal Guarantee from the directors and have no hesitation in enforcing it if your business fails. Are they really lending to the business at all?
So, the SMEs have an unwelcome cocktail of; no bank manager, lack of knowledge about where to go within the bank for help, no idea about what to do if the bank says no and an entirely understandable willingness to go with the first lender who expresses an interest whatever the terms.
Auditel recognise these problems and have therefore developed a finance specialism within their proposition to assist clients with issues such as those described above.
The best people to help clients get the best funding package are ex-bankers who have spent their careers in banking and understand if the customer’s business is supportable and if not, what is the best route to take in order that the customer can meet their strategic aims. Auditel will perform the role of the old-fashioned bank manager which every SME wishes they had and help you navigate the maze.
Aside from ‘core’ bank lending, Auditel also helps its clients to sense check their current deals on a range of other finance costs, two such examples being invoice finance and foreign exchange. Heavily bank-dominated marketplaces have traditionally meant that clients are more resistant to benchmarking their deal, either through fear of bank recrimination, or simply that banks are a ‘safe and secure’ place to be. Our experience has been that, in these two markets, there are excellent alternative providers offering improved service along with significant savings.
SMEs have never had it so good in terms of the liquidity in the market and the number of providers out there – the issue is where do you start?
Article by: John Wardle
This is an article from: Insight & Innovation: Issue 2 – click here to read the whole newsletter.