ArchOver and GapCap, which both specialise in providing loans to SMEs secured against invoices, have signed a formal Service Level Agreement which will enable them to cross-refer and share future business opportunities. ArchOver secures its loans against whole books of borrower companies’ Accounts Receivable (debtor invoices) whereas GapCap provides loans secured against selected individual invoices.
The intention is either to refer business where one or other platform is most appropriate to the particular circumstances, or to combine to provide borrowers with a double layer of finance: ArchOver to provide fixed term loans for basic working capital and GapCap to offer top up facilities to meet the cyclical needs of the same business.
Commenting on the agreement, Angus Dent, CEO of ArchOver, said: “Both organisations work in the same sector, but from different ends of the business spectrum. We often come across situations where we are either not in a position to help or are perhaps not the right people. The arrangement with GapCap means that, in some instances, we won’t need to turn the borrower away, but to send them along to GapCap who might be able to provide the help required.”
“In certain situations we will be able to lend alongside each other to provide borrowers with a real Alternative Finance solution that they would be unlikely to get from any bank.”
Alex Fenton, the founder and CEO of GapCap, said: “We are both operating independently in a busy and competitive sector and that situation will remain. However, this sensible collaboration can benefit UK SMEs trying to find the right funding solution to suit their particular circumstances.”
“On a broader scale, we see the collaboration between two finance sector disrupters as something of a ‘first’ in the Altfi industry. It’s not something the banks do, either, but ultimately this has to be to the benefit of smaller businesses looking to find flexible solutions to their financial problems. ”
ArchOver offers crowdlenders the opportunity to invest across its platform for secured returns of up to 8% per annum; it has raised over £17m for SME borrowers since it began operations in September, 2014. The Accounts Receivable, over which a first charge is taken and registered at Companies House, are protected against default by credit insurance provided by Coface, one of the largest credit insurers in the world.
Since inception in June 2014, GapCap, whose finance is provided by specialist funds including Advance Global Capital (AGC), is growing fast. The company, which provides borrowers with finance for up to 85% of invoice value within 24-48 hours, has helped clients of all sizes with annual turnover figures ranging from £80,000 to £17m.