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Rise in Bank Charges for SMEs

Bank finance is becoming both hard to access and expensive for many small businesses. Even if your business has previously been able to afford traditional funding such as overdrafts and loans, banks are increasing rates especially when it comes to customers that appear more risky – which small businesses often do. More and more companies are being pushed towards invoice finance and asset based finance to solve their funding issues.

Rising Charges

Existing credit facilities are often more expensive when businesses come to renew. Arrangement fees are becoming more costly, and collateral requirements on new lending are becoming more demanding.

Business owners are looking more to asset based forms of lending, such as invoice finance, to solve funding issues. This is an alternative to traditional overdraft facilities, and can help with cash flow while letting the business remain in control.

Late payment problems are also becoming more of an issue, especially when dealing with large companies. Suppliers are looking to tighten up payments, while customers are pulling in the opposite direction, trying to extend time frames.

With bank costs rising, this can price many small businesses out of the traditional funding market. In order to maintain a competitive advantage, firms need to continue innovating and investing in their business. With only dismal growth forecasts for 2012, it’s important for the small business sector to remain healthy in order to help the economy get back on track.

Alternatives

If your business has been denied bank funding, or is finding it too expensive, looking to invoice finance and asset based finance could be an alternative. Whether you suffer from cash flow or late payment problems, or are just looking to fund growth, looking to non-bank funding is becoming increasingly important.

Select Factoring offer a range of financing solutions for small businesses. Factoring and invoice discounting are secure, quick and flexible in providing funding, letting you release cash tied up in unpaid invoices.

 

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