Tag: sme

Telegraph Hub: How P2P can help your business grow: five key incentives

Author
Angus Dent
Date

ArchOver has teamed up with The Telegraph to produce a series of articles to help educate investors on the UK Peer-to-Peer Lending sector. In a brave new economic and financial world, understanding different ways of managing your money is key to success. P2P Lending can help both individuals and businesses navigate a post-Brexit world, with the reassurance that it is a secured and effective method of protecting and growing your money.

Peer-to-peer lending is becoming an increasingly popular way for businesses to get the money they need to expand.

According to recent figures from the Cambridge Centre for Alternative Finance, alternative finance business lending is 12pc of the market for lending to small businesses in the UK.

“These new channels of finance are increasingly moving mainstream,” says Robert Wardrop, executive director of the Cambridge Centre for Alternative Finance. Its 2015 report stated the sector had grown 84pc year on year and facilitated £3.2bn of loans, donations and investments.

Here are five ways in which peer-to-peer lending can help businesses.

1.  Speed

Getting a loan from a high street bank can be a slow process, with many forms to fill in and documents to check. Although a peer-to-peer lender will also want to carry out checks, the process is often quicker, which can help if you want to move quickly to make an acquisition or take advantage of a growth opportunity.

2.  Lack of personal guarantees

In some cases, lenders will ask directors to come up with personal guarantees when borrowing money, meaning that your own assets are tied to the repayment of the loan.

Some peer-to-peer lenders, such as ArchOver, do not ask for personal guarantees, relying instead on the assets of the borrowing business as guarantees – for example the Accounts Receivable for the company.

 business-growth

3.  Better fit with some types of company

Not every company has a plan that makes it easy to get a bank loan or equity investment. The repayment schedule may not work with your company’s cash flow and expansion plans, for example. In some cases a P2P lender can be more flexible.

4.  Value

While bank loans can be competitively priced, few companies can access them. Many companies have access to invoice financing but this is expensive and difficult to manage. P2P is usually cost-effective, easy to manage and readily available. Of course, it pays to compare the two.

5.  Maintaining control

Other ways to fund your business, such equity crowdfunding or venture capital, involve giving away a proportion of your business in return for the money. P2P borrowing allows you to maintain control of the company.

Time to Break the Invoice Financing Habit

Author
Angus Dent
Date

Many SMEs automatically cover the gap between production and payment by using invoice financiers (IFs), which claim to advance between 80% and 100% of the value of each invoice raised, but on average advance only about 63%. This has been fuelled by the reluctance of the traditional banks to lend to SMEs, but virtually all businesses would be better off using one of the other forms of finance available.

IFs usually require personal guarantees and involve huge amounts of internal administration and complicated fee structures, plus the amount of available finance is unpredictable. When business is strong, a company will have lots of money sitting in its current accounts and when business is slow, and the company really needs it, the finance is not there.

Established businesses with strong order books are better off opting for reasonably priced fixed term loans, which are easier to obtain than many believe.

business-loan

For example, ArchOver offers a fixed term loan for up to two years, which can be rolled over for a further period if desired. This means the business always knows how much is in the bank and the same finance is available in slow times as in good.

These are secured against the insured long-term value of the debtor book and, as long as the value of accounts receivable stays above a certain level, the finance will remain the same. The loans are remarkably straightforward to arrange and no personal guarantees are required.

It is often said that IFs are good for start-up companies with no trading history or stable debtor book, and the amount of finance available grows as the company grows. Nonsense, these enterprises really need equity finance as growth in start-ups is never in a straight line and the problems of good and bad periods are even greater.

It is essential to look beyond IFs in all situations

To learn more about how ArchOver can help with your business needs, contact a member of the team today at 0203 021 8100.

BUSINESS AS USUAL AT ARCHOVER

Author
Alex Taylor
Date
It took less than two hours yesterday (June 27) for lenders to snap up a £150,000 business loan on ArchOver’s ‘Secured and Insured’ crowdlending platform. The 12 month facility, offered on behalf of rapidly-expanding accountancy firm Spain Brothers, was the first new transaction to appear on the platform since the EU Referendum result was announced last Friday. Lenders will receive a return of 8% per annum.
Commenting on the loan, ArchOver CEO Angus Dent said: “We don’t yet know exactly what the future holds, but, far from retreating, we see this as a period of opportunity. We can demonstrate that the ArchOver platform remains in good working order for the benefit of ambitious SMEs and discerning lenders. Successful companies have clearly not lost the confidence to raise the finance they need to develop and grow their businesses, while lenders have equally not lost their appetite for keeping their investment returns as high as possible in this uncertain world.”
“It speaks volumes for the loyalty of our lenders who clearly appreciate our easy-to-access systems and trust our ‘Secured and Insured’ model to safeguard their interests as well as deliver attractive returns.”

ArchOver and GapCap form strategic alliance to extend market reach

Author
Alex Taylor
Date
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.