Increased regulatory scrutiny in the wake of the 2007-2008 financial crisis has put pressure on banks to adopt a more risk-averse culture and prohibitive customer onboarding processes. In this environment, like many organisations around the globe, you may find it challenging to access the finance you need to weather business storms and put your growth plans into action.
Fortunately, there are other funding mechanisms available that offer a lifeline to businesses in need of short-term working capital. These include bridging finance and trade (or stock) finance.
The benefits of bridging finance
In recent years, more customers and businesses have become aware of the benefits of bridging finance, and soaring demand has fuelled phenomenal growth in the sector. In the UK, for instance, the regulated bridging finance sector is valued at GPB 4 billion.1
Bridging finance is an asset-backed loan used to maintain liquidity while waiting for a cash inflow due in the near future. For instance, some firms choose to use a bridging loan to cover business funding gaps while they are in the process of arranging longer-term finance.
While loan amounts and terms vary, bridging finance is typically provided as a short-term loan – generally between three and nine months. By its nature, bridging finance can be accessed easily and quickly, especially when it is facilitated by reputable private institutions that specialise in alternative funding services.
If your company is established in the market and you have efficient sales ledger administration and collection routines, this is a finance opportunity that may be ideal for your organisation.
Why apply for bridging finance?
- Access funds fast:
Bridging finance boosts your cashflow. With a well-selected finance partner, you can expect to receive the funds quickly.
- Don’t put growth plans on hold:
Bridging finance empowers you to take advantage of opportunities in the market before your competitors do – with ready cash to invest in the raw materials, stock, equipment or technology you may require.
- Expand and hold onto equity:
This interim funding option allows your company to expand without having to sell equity to fund this growth.
- Mitigate the risk of reputational damage:
By keeping cashflow healthy, bridging finance helps your business to stay liquid, meet expenses, keep your relationships with suppliers healthy and maintain your good standing in the market.
The freedom to finance more stock
Trade or Stock finance is an asset-backed facility that enables growing businesses to increase their stock levels. Essentially, it provides the working capital you may require to fund the operational cycle (i.e. from the time payment is made to a supplier until funds are received from customers).
This allows you to respond to increased demand; and boost your sales and profits without tying up the internal funds you need for your other operational expenses.
This form of finance is typically layered over and above conventional banking finance, with the purpose of increasing your flexibility to increase stock levels as and when required.
Why apply for trade or stock finance?
- Generate more profit:
This financing option allows you to augment sales of existing product lines, as well as develop new ones.
- Gain purchasing advantages:
By being able to buy in larger quantities, you may benefit from economies of scale or receive purchase discounts through prompt payment of suppliers.
- Respond quickly to demand fluctuations:
Trade or stock finance makes funds available for special opportunities, emergencies and seasonal peaks.
Ultimately, these benefits translate into greater profitability and a more competitive position in the market for your business.
Looking for the ultimate interim finance solution?
Merchant Factors was founded in 1988 to offer growing businesses an alternative to traditional bank loans and overdraft facilities that are more headache-inducing than helpful.
We understand that you have unique needs at various points in the lifecycle of your business. As a totally independent finance house, we have the agility to provide businesses with innovative and relevant working capital solutions when they are needed – ranging from factoring to stock and bridging finance.
We also understand that you can’t afford to put your business goals on hold. This is why Merchant Factors offers you the fastest turnaround time in the industry from application to pay-out.
For fast, flexible financing – contact Merchant Factors today.
Finance beyond the Numbers.