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UK Lending- the current situation.

It is quite incredible how stories can flip from day-to-day. For weeks, Select Factoring have been reporting on the current economic climate and praising the government for pushing high street banks to ease lending to small and medium businesses. But in a report published yesterday, it seems that  UK Lending is incredibly strict or non-existent.

One unfortunate business woman attended her bank to renegotiate a £500,000 overdraft and instead she was shocked as the bank completely withdrew that facility. Apparently this is becoming common place amongst businesses, where they have had facilities such as overdraft’s and business loans for year. Possibly relying on the fact that they will always be available, but when the banks take away these facilities it can leave a lot of companies in the lurch.

330 companies were surveyed. The results were a rise in the cost of credit and a reduction in banks lending and providing business facilities.

Some banks have changed their facilities and are now providing alternative funding such as invoice discounting.  It is a great way to provide funding to companies, but some feel that an agreed overdraft left them with facilities that had no strings attached.

Factoring and invoice discounting are not a new phenomenon. In fact the USA and Australia thrive on these forms of alternative funding.

In the UK, the number of SMEs using Factoring and Invoice discounting has risen in the past financial year, yet only a tiny percentage of companies actually use this facility or know what Factoring is.

Banks using invoice financing have offered what seems a great deal to their business customers, but some have required specific payment terms, which some businesses find difficult to meet and un reasonable.

This leaves some company completely stuck. Our advice? Speak to an independent Factoring Lender, they will be able to offer a range of solutions.

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