Advantages of factoring finance:If your business is suffering from cash flow problems, a business loan could be the answer. A business loan can give you the instant finance you need to keep your business running successfully whether it is to ease current financial difficulties, or to fund future ventures.

Advantages of factoring finance:

• The process of factoring finance is dependent on the customer’s credit record, NOT that of the business. Even if the business’ credit record has not been good enough to previously obtain finance, factoring finance can still be of assistance as it is the customer which becomes the debtor, not the business.

• Full responsibility for the customer’s conduct as to meeting the payment when the invoice becomes due falls in the hands of the factoring company, not the business. This means that the business does not owe anything to the factoring company if the invoice is written off.

• The factoring company is sympathetic to individual customer payment terms i.e. if a customer is offered 6 months’ credit by the business, this agreement will be honoured by the factoring company.

• Not all business customers need to partake in the factoring process. The business has the right to choose which customer invoices will be credited by the factoring company.

Small Firm Loan Guarantee Scheme

A small firm that has a viable business proposal, but has previously tried and failed to get a conventional loan because of a lack of security, may be entitled to a loan through the small firm loan guarantee scheme provided by banks and other financial institutions.

• For a business to be eligible for this loan scheme, it must be a UK company with a maximum annual turnover of no more than £1.5m (£3m for a manufacturing company).

• Loan amounts anywhere from £5,000 to £100,000 may be available for loan periods of between 2 and 10 years, on this scheme.

• If a business has been trading for more than 2 years, they may be entitled to a loan of up to £250,000.

• The scheme guarantees 70% of the loan (85% if the applicant business has been trading for more than 2 years). In return for this guarantee, the borrower repays the lender a premium of 1.5% per year on the outstanding amount of the loan. The premium is reduced to 0.5% if the loan is taken at a fixed rate of interest.

• The process of factoring finance is dependent on the customer’s credit record, NOT that of the business. Even if the business’ credit record has not been good enough to previously obtain finance, factoring finance can still be of assistance as it is the customer which becomes the debtor, not the business.

• Full responsibility for the customer’s conduct as to meeting the payment when the invoice becomes due falls in the hands of the factoring company, not the business. This means that the business does not owe anything to the factoring company if the invoice is written off.

• The factoring company is sympathetic to individual customer payment terms i.e. if a customer is offered 6 months’ credit by the business, this agreement will be honoured by the factoring company.

• Not all business customers need to partake in the factoring process. The business has the right to choose which customer invoices will be credited by the factoring company.

Small Firm Loan Guarantee Scheme

A small firm that has a viable business proposal, but has previously tried and failed to get a conventional loan because of a lack of security, may be entitled to a loan through the small firm loan guarantee scheme provided by banks and other financial institutions.

• For a business to be eligible for this loan scheme, it must be a UK company with a maximum annual turnover of no more than £1.5m (£3m for a manufacturing company).

• Loan amounts anywhere from £5,000 to £100,000 may be available for loan periods of between 2 and 10 years, on this scheme.

• If a business has been trading for more than 2 years, they may be entitled to a loan of up to £250,000.

• The scheme guarantees 70% of the loan (85% if the applicant business has been trading for more than 2 years). In return for this guarantee, the borrower repays the lender a premium of 1.5% per year on the outstanding amount of the loan. The premium is reduced to 0.5% if the loan is taken at a fixed rate of interest.