| Alternative funding for small and micro business |
| Monday, 17 January 2011 04:55 |
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Cash advances as a solution to cash flow shortfalls.
Cash advances as a solution to cash flow shortfalls. Whilst the Government and the banks continue to overlook the small and micro business sectors when it comes to lending money, thousands of companies are seeking out alternative ways of securing financial support to help their businesses thrive and grow. Business Cash Advance launched three years ago but has already injected millions of pounds into thousands of UK companies and has found that the majority of their clients approach them because they are frustrated by the banks.Richard Morley, founder of BCA says: “Since coming into power the coalition Government has made many bold statements about growth in the private sector and how important it is for small businesses to thrive in order to pick up the shrinkage in the public sector. Yet grand plans and incentives to stimulate this growth like the Business Finance Taskforce have ignored the 4.5 million businesses with fewer than 10 employees which account for 95% of businesses in the UK and employ one third of people working in the private sector.” It is these smaller companies like restaurants, shops and hairdressers which make up the majority of BCA’s customers. Advances are made on projected credit and debit card transactions and are repaid as those transactions are made; whilst a fee is charged, there is no fixed monthly repayment, no interest and no late payment charges. Cash advances are very successful in the United States and BCA’s founders spotted a gap in the UK market and launched the concept three years ago and have since found that its clients appreciate the simplicity and flexibility of an advance. Chris Macklin owns Trading 4 U, three home and garden ware stores in Sussex, and when his finance company withdrew their offer for funding to pay for a new computer system after the equipment had been installed, he was advised to turn to Business Cash Advance by the supplier who was waiting to be paid. “The finance company left me high and dry. The supplier was chasing for payment and when I told him what had happened he advised me to use BCA and they turned out to be very good. Very helpful and very quick,” says Chris. He has been so impressed with the flexibility and simplicity of the BCA service that he had his fourth advance agreed in September to pay for this year’s Christmas stock. “I can turn £20,000 into £50,000 but for instance I need to pay £20,000 for a container of garden furniture in January which will arrive at Easter. It won’t start selling until May and will continue selling through to August. The banks don’t like to loan for stock purchases but I didn’t have to justify to BCA what stock to buy, they just wanted to be satisfied that the advance would be repaid,” says Chris who finds the method of repayment fits in perfectly with the way his business works. “Paying back via the card transactions means it is not so noticeable. If we have a good weekend it is paid back faster. Yet in December last year we had four days of snow and that killed the business. But BCA goes through that with you,” he says. Richard Morley adds: “It is no coincidence that as banks have lent less to small businesses we have doubled the number of advances we have given in the last year. Unlike the banks, we have an appetite for investment and are actively seeking businesses to support.” Finance from the banks is difficult to come by and any applications have to be accompanied by business plans and financial forecasts which can take time to prepare. In addition, the banks can be very prescriptive over what they will loan for refusing to lend money for things like stock purchase or marketing which are vital to help a smaller business thrive and grow. With BCA businesses do not need to provide collateral, give away equity or prepare a great deal of paperwork and most businesses get a decision on their advance within ten days. “A familiar story from our clients is that they feel let down by both the Government and the banks,” concludes Richard. “The issue is that the term small business covers all companies employing up to 249 employees, yet how can you lump together the needs of an organisation employing over 200 people alongside someone who owns a garage or runs a pub? Initiatives like the Small Business Finance Taskforce and the Big Society Bank have their place but are completely inappropriate for the vast majority of companies underneath the small business umbrella. It’s about time we had some initiatives of our own.” For more information go to: www.businesscashadvance.co.uk
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