Factoring Services: The Secret to SME Finance

 

Introduction

SME (Small and Medium Enterprises) are the backbone of the UK economy, accounting for 99% of businesses in the country. This is why factoring services have become a popular way for SME to access finance. However, what exactly are these services? And how can they help your business grow? In this guide we'll cover everything you need to know about SME finance: how it works, what it's for and why you should use it!

What is SME Finance?

SME finance is funding for small and medium sized enterprises. SMEs are companies with up to 250 employees, who have a turnover of up to £50m and are not listed on the stock exchange.

It can be difficult for SMEs to get the funding they need to grow and prosper. Banks are more likely to lend money to large companies with a proven track record and this means that smaller businesses have trouble finding finance they can afford.

Benefits Of SME Finance

SME finance can help you get the cash you need to grow your business. You can also use it to pay suppliers and pay wages.

Benefits of SME Finance:

·         Quick Approval Times - The average approval time is between 1-2 days and there are no credit checks or collateral needed

·         Flexibility - You can apply for an amount in any value (large or small) up to £10m at any one time

·         No Credit Checks Or Collateral Required – Unlike other forms of financing, there are no credit checks involved in applying for factoring services as they are based on a proven business model that works well with businesses all over the world

An alternative to bank loans.

Factoring is an alternative to bank loans. Banks are reluctant to grant business financing because they are increasingly risk-averse, preferring instead to lend money for more conservative purposes like home ownership or personal car purchases. This makes it difficult for small businesses that need working capital in order to expand their operations, especially if they do not have a reliable history of profitability. For example, a restaurant owner who wants to expand her restaurant by adding another location may be rejected by banks because she does not have enough assets (such as collateral) or revenue (such as profits) on record against which the bank can secure its loan.

Factoring services provide access to cash without requiring borrowers to pledge collateral against their debts; instead of taking ownership rights over your company's inventory or receivables, factoring companies lend against them using their own funds as collateral while you continue operating your business normally with no disruption in operations whatsoever! You retain control over your inventory and receivables while enjoying access to needed capital that would otherwise be unavailable due to strict lending standards imposed by traditional financial institutions like banks and credit unions (which tend only lend money out when absolutely necessary).

The benefits of Factoring Services

Factoring Services are a way for businesses to increase their access to working capital and help them deal with the cash flow problems that they face. It works by taking the invoices of a business, selling them on as soon as they are due, which means that you get paid earlier. This can be very beneficial for businesses because it can give them more time in order to pay their suppliers and also reduces their risk exposure.

With factoring services, you're basically receiving an interest free loan from your factor until your customer pays off his debt (the amount owed on the invoice). Once this has been received back into your account your lender will be repaid immediately with no other fees or charges involved whatsoever - making factoring services an extremely attractive option for any small business owner looking at improving their cash flow situation!

How difficult is it to get factoring services?

If you have a business, then factoring services are available to you. It is not just for companies with poor credit ratings or bad credit history and it is not only for companies with an unstable cash flow. Factoring services are available to all businesses, regardless of their size and situation.

The only requirement is that your company must be able to supply invoices that can be used as security by the factoring company, but this doesn't mean that every invoice from your business will count as security - only those issued within 30 days before the factoring request will count as security against any debts outstanding at the time of application.

Conclusion

We have seen that SME finance is a great option for businesses. It provides financing for businesses that may not qualify for traditional bank loans, but can still provide the cash flow needed to keep operations running smoothly. The benefits of factoring services include increased cash flow for your business and reduced administrative costs when compared with traditional bank loans. While getting an SBA loan may be difficult due to strict requirements, factoring is a much easier process since there are fewer restrictions on who qualifies or how much money they can receive from this type of financing option.