Overdrafts and finding an alternative source of finance
Businesses have used overdrafts for hundreds of years but you may not be aware that the concept was invented here in Britain – in Edinburgh to be precise. But some business owners may not be totally aware of an alternative source of finance to the traditional bank loan.
In 1728, a merchant called William Hog approached the Royal Bank of Scotland as he had a problem – a cash flow problem. Although he had a profitable business he was under pressure to pay bills because he was awaiting payment from his own customers. The bank allowed payments to be made despite the fact that the bank account was empty. This “slipping into the red” or overdrafts was a temporary situation for a few days at a time and was repaid on each occasion from anticipated funds. William Hog temporarily changed from being a depositor to a borrower.
What are my other options when it comes to commercial finance?
These days it is hard to imagine businesses operating without overdraft facilities (although some do), but there has been a gradual reduction in the use of overdrafts. Bank of England data reveals that £5 million worth of SME overdrafts have been cut most days for two or three years since 2011, although it is now stabilising. This probably started initially as a consequence of the banks seeking to reduce the risk on their own balance sheets but then business owners themselves lost confidence and the appetite to borrow.
The good news is that confidence is back. Businesses are investing to meet demands of a growing economy – and that takes cash. The banks are lending but they are being very selective. If you are running a business and the bank won’t help what options are available? There are plenty.
All types of plant, equipment, fixtures and fittings can be purchased using a variety of flexible asset finance products. Existing assets can be re-financed. This applies to a whole range of industries. Everything from shop fittings and display counters through to heavy engineering plant, commercial vehicles, IT equipment and agricultural equipment – there are finance and leasing products to suit all.
If you are in a B2B business, debtor finance such as invoice discounting and factoring can address your cash flow needs. But it doesn’t stop there. Peer-to-Peer lenders and Crowd Funders and other specialist lenders have emerged and evolved to fill funding gaps. There are niche lenders some of whom are only accessible through intermediaries.
In fact, in an ever-changing market there are so many lenders, it has become a minefield knowing which is best suited to your needs. If you’re not sure or don’t have time to shop around, it’s best left to experts to obtain quotes for you.
Why Choose us?
Our years of experience working in this sector means that WF Financial Solutions are perfectly placed to assist you in raising business finance. Whether you are a sole trader, partnership or a limited company. As well as having access to numerous sources of finance, our team includes ex-bankers to help deal with your requirements.
We know what finance suppliers are looking for and we can help you prepare a good case to secure the right deal and to take the stress out of the process.
So for further information regarding the different types of commercial finance, what we can offer you and how we can help your business. Simply get in touch with us and ask for your free, no obligation quote.
Some of the partners we work with...
Why Choose Us?
WF Financial Solutions is an independent broker of invoice, asset and trade financing solutions with links to lenders of all sizes and specialties. WF Financial Solutions has helped many clients through the range of lenders and their varying services and are proud to offer advisory and introductory services to finance providers that suit your needs.