Alternative funding option for SMEs
The silly season is upon us, and all the city slickers are about t o descend upon t he coast, or i nto t he bush, i n search of some relief. For many in the retail and hospitality industries, t his is make or break time – the profits t hey generate over t he December holidays often need to see them through the rest of the year.
For SMEs, this is an extremely vulnerable position to be in, and one slow festive season can potentially close the doors of a promising business. The fluctuating or “seasonal” revenue stream of these types of businesses is a red f lag for most banks, who are unwilling to provide attractive loans – a situation that has only been made worse by tough macro economic conditions. This has opened up a gap for lenders who are pre--
pared to think out t he box a nd of f er a n alternative funding solution for SMEs that need capital to see them through the slow periods, or unexpected crises.
One such lender that appears to have a workable solution is Retail Capital, a new f inancial services provider that is punting what it calls a “business advance” product to local SMEs. The service is fairly straightforward: Retail Capital advances a lump sum of the business’s future sales and then takes an agreed percentage of daily credit/debit card sales until the total value that has been purchased is reached, with no fixed payment period.
David Lewis, Retail Capital’s CEO, says: “We’re in business to make sure that the other organisation stays in business, so the interests of the two parties are closely aligned. No f inancial security or guarantees against business failure are required, and t he pay- over process is linked to turnover so the repayments are f lexible. Also, the application process is simple and comparatively quick – a business could
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