Our Head of Sales, Asset Based Lending, John Mackey was delighted to be invited to speak at the recent Enterprise Ireland’s Seminars in Limerick & Dublin advising local businesses on getting the capital structure right & identifying the appropriate sources of funding to help them growth their businesses.

John Mackey was joined by speaker, Paul Kerr First Choice, who spoke about how Banks are currently turning away 50% of SME loan applications, creating a real need for alternative forms for funding. He went on to say that, in addition to the practice of seeking personal guarantees, the banks 92% of SME’s still deal with banks who have multiple legacy issues such as  regulation, capital adequacy, cost cutting/. The pillar banks are also moving to direct models of banking, which is not working.

According to Kerr, banks should have a decision for SME lending applications in 15 days, however the reality is that businesses can often wait weeks for a decision, and that decision is not always a positive one. in fact, according to the latest ISME report, in the last 3 months along, loan refusal rates have increased from 24% to 36% and Businesses wait on average 8 weeks from decision to funding drawdown.

John Mackey took the time to explain Invoice Discounting, and how it is the most popular cash flow facility in terms of users.  Invoice Discounting is now used by mulitple large corporations as cashflow finance, and SME’s are also recognising its key benefits – such as – provision of cashflow without any collateral; and credit can be increased as the value of the sales ledger increases. In addition the company only has to pay interest on the amount of funds that is taken from the line of credit. But the real advantage is that the invoice discounting provider, due to the nature of the product, needs to sit down and get fully acquainted with the business, in order to ensure that the business grows in line with the invoice discounting product. This means the company receives valuable insights into company financials.