Go with the cash flow...

As the mainstream banks continue to reign in their risk appetite thousands of SMEs are struggling to gain access to finance in order to support their business strategies.

Banks typically have offered its customers a “secured” loan that has required a borrowing company to post an asset as collateral (e.g. property, equipment, stock or debtors) to “secure” the capital that a bank lends to them. Where a business does not in the bank’s opinion have sufficient collateral, many businesses have been rejected by their incumbent banks despite being profitable and cash generative.

However, there is another important type of secured loan that does not require collateral in the form of physical assets: the cash flow loan. From the conversations I have been having recently with many SME across the Midlands, most simply did not know this was an option for them.

Rather than requiring physical assets as security, a cash flow loan is backed by the borrower’s expected future cash flows. For many SMEs, especially businesses with minimal tangible assets or those with a contractual debtor book, this makes much more sense than the traditional method of borrowing.

At ThinCats, we do things differently and we believe ‘cashflow lending’ is the solution that can plug this funding gap for many SME’s. Here’s why:

1) Cashflow lending can maximise the debt capacity of the business

As we are not restricted to the lending against the tangible assets of the business there is the potential to leverage more debt than conventional lending;

2) It levels the playing field for service companies

Thousands of SMEs are servicesfocused, with little or no tangible assets. At ThinCats we can take the time to understand the business and the predictability of its cashflows in order to gain comfort over the lending requirement.

3) Understanding the funding needs of the business now and in the future

In order to provide a cash flow loan we need to genuinely understand the client’s business and so we develop a close partnership-focused relationship with our SME clients in order to address immediate financing gaps and build a strong foundation from which we can provide future funding solutions.If you think cashflow lending could be right for you and your business, please do get in touch.

Geraint Regan is Director, Regional Business Development

at ThinCats Geraint.Regan@thincats.com