How Finance Directors Play A Crucial Role Securing SME Finance

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How Finance Directors Play A Crucial Role Securing SME Finance

Securing funding can be a challenge for any business and knowing where to go to get this funding when the answer may not be ‘your bank’ is tricky. Finance directorsknow that when secured funding avenues have been exhausted, options for other lending areas need to be investigated.

Banks will usually fund an amount that reflects the assets in a business. But if a company has no further assets to offer as collateral, or if the directors do not want to commit
to personal guarantees, banks find it difficult to help.

In a service-based economy such as the UK, the lack of unsecured lending, based on an understanding of the future cash flows of the business creates an obstacle for growth and succession planning. So, what do you need to do?

If you find yourself in this position and you need to have a more holistic finance option, get a part-time Finance Director on board – even if it’s just for a day or two a month. The cost spent on that resource will pay dividends long term.

A good finance director will work with your accountant as a trusted business advisor. The advice and expertise of an accountant and financial director is central to a successful SME funding outcome. They assist in navigating a crowded market, structuring the funding solution and preparing financial forecasts and business plans.

In a world where all credit was provided by high street banks, seeking alternative finance was unnecessary and mainly unheard of. However, as banks retreat from this market, alternative financers are filling the gap. For instance, Caple’s strategic alliance with BNP Paribas Asset Management enables institutional investors to invest directly in unsecured SME loans. In addition, BNP Paribas Asset Management has the ambition to provide €1 billion in funding across Europe and €400 million in the UK per year through its SME Alternative Financing platform. Now, through new businesses like Caple, SMEs are able to access long term flexible and unsecured debt finance of between £500,000 and £5 million.

With new lending models that make the best use of accountants, institutional investors and technology, financial directors can access the funding they need to develop and grow the businesses, paying particular attention to understand the quality and reputation of a creditor being put forward. In turn, SMEs can make an even greater contribution to UK economic growth and job creation – a win all round.

If you would like to know more about the role of the Finance Director or would like our help with alternative finance options, please contact Stuart Smith at Watersmiths on 07785 556 450.