Alternative fund­ing op­tion for SMEs

Finweek English Edition - - BUSINESS -

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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