Only 13% of businesses receive their agreed loan from the bank

UK businesses face a major funding crisis, ArchOver finds, with 34per cent saying late payment has caused their business to fail

London, UK – 4 March 2019 – British companies are facing a funding crisis because banks are not supporting the future of UK PLC. Businesses desperate for finance to support their growth are only receiving on average 70 per cent of the agreed loan – which means over a third (37 per cent) are unable to launch a new product or service as a result.

Research commissioned by ArchOver, which reviews the funding landscape for UK businesses in the last year, has found that one in five companies are being rejected for a loan by banks, and of those 17 per cent were put off or unable to apply for any further loan, crushing the entrepreneurial spirit of UK SMBs.

The research also identified the catalysts for companies requiring additional financing and what type of loan they secured.

More than two in five (43 per cent) were prompted to seek finance in order to fund digital transformation, whilst 39 per cent needed a loan facility to fund the move to a new premises or purchase new equipment. More worryingly, over a third of businesses required credit to cover short-term cash flow issues – a threat to their ability to function overall.

ArchOver discovered that part of the reason for this is that companies are facing an epidemic of late invoice payments, causing cashflow problems that are compounded by the lack of bank support. Less than one in twenty respondents (under 5 per cent) said their invoices are paid on time all the time. Just under half of them (49 per cent) said they receive fewer than half of their invoices by the due date.

That’s pushing many into the arms of dangerous financing options. Four in five (81 per cent) of businesses have considered using invoice discounting to fix their cashflow problems. But over-promising is built into invoice discounting. The same amount of respondents (80 per cent) said their business is now over-dependent on invoice discounting – like opium, it provides a quick hit, but at the cost of addiction and long-term expense.

Conversely, nearly six in ten (58 per cent) of those who’ve used invoice discounting now believe peer-to-peer (P2P) lending is safer, and 54 per cent believe they can obtain a better rate on their loan with a P2P provider than through a bank.

“The funding system for UK businesses is broken”, commented Angus Dent, CEO. “2018 was a tough year to be an SME to say the least, but companies aren’t bowing down just yet – despite the best efforts of the banks. Our research shows that despite their optimism, high-growth companies are being turned away time and again by big funders who, we’re told, have postponed all decisions on sub-£10m loans until after 29 March. That businesses have to run into the arms of unscrupulous invoice discounters to find cash is an indictment of the finance industry’s treatment of British business.

“Brexit is about to make the funding picture even harder for businesses. But there are options that won’t ignore you or suck you dry. If they want to keep growing in 2019, UK companies need to look for financiers who’ll get to know them deeply and support them through the storm – not just make a quick buck from them.”

To read the full report, please visit ArchOver’s website.

About the research

In Q4 2018, when the Pound hit its lowest rate against the Euro since the 2017 Brexit referendum, ArchOver commissioned research to understand how UK businesses are affected by unfulfilled promises and misleading terms and conditions in their funding arrangements. It aimed to get a clear picture of SMEs’ experience when seeking funding, the major obstacles they face and the impact they have.

We interviewed 255 respondents, working in businesses with 50 or more employees who have sought finance in the last five years or are currently seeking finance.

All respondents were management-level and above, and were spread across the IT, financial services, manufacturing, professional services, construction and pharmaceutical industries. Participant companies had revenues ranging from £500,000 to over £100 million.

About ArchOver

ArchOver is a peer-to-peer (P2P) business lending platform, connecting businesses requiring finance with investors seeking an alternative asset class for their investment portfolio. ArchOver is approaching £100m of funding to UK businesses, having paid over £5m in interest and delivering lender returns of up to 10% p.a..

“We are helpful, focused and flexible. While technology sits at the core of what we do, we are a people business; we believe in building lasting relationships.”

Lending with ArchOver takes place over its secure online platform. Invest on a loan-by-loan basis in multiples of £1,000, or in increments of £250 via its automated Investment Plan. Loan-by-loan investments earn interest between 6% and 10% p.a., and up to 6.4% via their Investment Plan. Interest is paid monthly in arrears from loan draw down.

Borrowing companies are UK-based and seeking a loan of between £250,000 and £10m. They will have been trading for a minimum of two years, have an established management team and proven business model. Loans are for any business purpose, typically raising working capital, replacing invoice discounting or bank overdrafts. Loans are fixed term, for a fixed amount and at a fixed rate of interest.

ArchOver offers five lending services supporting UK businesses. Each service addresses security in different ways to suit the needs of the Borrowers and the appetite of the Lenders. ArchOver’s flagship ‘Secured & Insured’ (S&I) service allows lenders to invest in loans secured against a company’s Accounts Receivable, where those Accounts Receivable are insured. ‘Secured & Assigned’ (S&A) allows Lenders to invest in loans that are secured against a company’s contracted recurring revenue, with ArchOver taking assignment of the contracts. ‘Secured’ (S) loans are leveraged against either a company’s Accounts Receivable or contracted recurring revenue, with the main difference being that the Accounts Receivable are not insured and the recurring revenue is non-assignable. ‘Bespoke’ (B) loans are made on the same basis as S&I or S&A, with the sole exception being that the all-asset charge initially ranks second and will transition to a first charge during the loan term. ‘Research & Development Advance’ (RDA) is unsecured short-term lending against an identified Research & Development claim payable to a company by HMRC. ArchOver also has an IFISA.

ArchOver is a member of the long-established, privately-owned Hampden group.

ArchOver is authorised and regulated by the Financial Conduct Authority 723755.
Lender capital is at risk and interest payments are not guaranteed if the borrower defaults.
Lending over the ArchOver platform is not covered by the Financial Services Compensation Scheme.

ArchOver drives UK expansion in Hertfordshire & Bedfordshire

New regional hub in Hatfield will support growth of regional entrepreneurial SMEs with P2P loans

London, UK – 7 May 2019 – ArchOver, the P2P business lending platform, is expanding its presence in the UK with a new office in Hatfield. The regional hub will provide successful businesses in Hertfordshire and Bedfordshire with P2P loans to fund growth.

SMEs have received too little support from the Government, especially outside London – and ArchOver is pushing back. Its founders recognised the potential of the UK’s hard-working enterprises when it started trading back in 2014. Opening this regional office will enable ArchOver to position itself to connect local businesses with the funding they find difficult to access now.

ArchOver’s Hatfield office will cater specifically to businesses in the Hertfordshire-Bedfordshire area, facilitating finance that works for them with a deep understanding of their individual needs and local situation. In 2018, Grant Thornton said that Hertfordshire SMEs need to focus more on raising finance – ArchOver’s presence will help them do just that.

This expansion is the latest in a series for ArchOver’s growing network, with headquarters in London and a Midlands presence established in Birmingham in October 2018. The company has facilitated close to £100m in funding for UK businesses – and that figure will continue this momentum as it increases its presence across the UK.

Leading the office will be Dugald J. Carlean, an experienced corporate finance professional – who has lived in Harpenden for over 17 years. Prior to joining ArchOver, he held numerous senior positions across the UK SME investment banking space, providing funding services across various sectors. With over 25 years in finance, Carlean has a firm appreciation of the funding issues and wider challenges SMEs face. He brings a deep knowledge of the challenges and opportunities involved in SME funding in the area.

Commenting on the expansion, Carlean said: “The Government did little to support the SME sector in the Spring Budget Statement. It’s a tough time to be a smaller business, but the spirit of entrepreneurialism is rich in Hertfordshire and Bedfordshire. The region is a major hub for the UK SME economy, with 98,000 small-to-medium firms operating in sectors as diverse as pharma, fintech, construction, life sciences and advanced engineering.

“ArchOver’s new office is at the heart of commercial activity in the Hatfield Business Park and will provide a platform to inject much-needed finance into that already thriving landscape. I’m excited to be part my home region’s growth – and to lead this expansion of ArchOver’s existing successful business model.”

ArchOver CEO Angus Dent concluded: “Too many companies make the mistake of seeing the world through a ‘London-only’ lens. This country is full of fast-growing, sustainable businesses looking for supportive funding to help them grow – something that neither the Government nor the banks seem to understand. Our new office in Hatfield will help local companies get access to the cash they need to grow. While the banks continue to evacuate the SME space, we’re investing in the future of entrepreneurial business in Hertfordshire and Bedfordshire.”  [ENDS]

About ArchOver

 

ArchOver is a peer-to-peer (P2P) business lending platform, connecting businesses requiring finance with investors seeking an alternative asset class for their investment portfolio. ArchOver is approaching £100m of funding to UK businesses, having paid over £5.5m in interest and delivering lender returns of up to 11% p.a..

“We are helpful, focused and flexible. While technology sits at the core of what we do, we are a people business; we believe in building lasting relationships.”

Lending with ArchOver takes place over its secure online platform. Invest on a loan-by-loan basis in multiples of £1,000, or in increments of £250 via its automated Investment Plan. Loan-by-loan investments earn interest between 6% and 11% p.a., and up to 6.4% via their Investment Plan. Interest is paid monthly in arrears from loan draw down.

Borrowing companies are UK-based and seeking a loan of between £250,000 and £10m. They will have been trading for a minimum of two years, have an established management team and proven business model. Loans are for any business purpose, typically raising working capital, replacing invoice discounting or bank overdrafts. Loans are fixed term, for a fixed amount and at a fixed rate of interest.

ArchOver offers five lending services supporting UK businesses. Each service addresses security in different ways to suit the needs of the Borrowers and the appetite of the Lenders. ArchOver’s flagship ‘Secured & Insured’ (S&I) service allows lenders to invest in loans secured against a company’s Accounts Receivable, where those Accounts Receivable are insured. ‘Secured & Assigned’ (S&A) allows Lenders to invest in loans that are secured against a company’s contracted recurring revenue, with ArchOver taking assignment of the contracts. ‘Secured’ (S) loans are leveraged against either a company’s Accounts Receivable or contracted recurring revenue, with the main difference being that the Accounts Receivable are not insured and the recurring revenue is non-assignable. ‘Bespoke’ (B) loans are made on the same basis as S&I or S&A, with the sole exception being that the all-asset charge initially ranks second and will transition to a first charge during the loan term. ‘Research & Development Advance’ (RDA) is unsecured short-term lending against an identified Research & Development claim payable to a company by HMRC. ArchOver also has an IFISA.

ArchOver is a member of the long-established, privately-owned Hampden group.

ArchOver is authorised and regulated by the Financial Conduct Authority 723755.

Lender capital is at risk and interest payments are not guaranteed if the borrower defaults.

Lending over the ArchOver platform is not covered by the Financial Services Compensation Scheme.

 

Dugald Carlean

Regional Director, Head of Hertfordshire & Bedfordshire Office

ArchOver

T. 01707 932 093

E. dugald.carlean@archover.com

archover.com/herts-beds

 

PR contact

LEWIS T. +44 20 7802 2626

E. archover@teamlewis.com

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