Survey: Liquidity and cashflow are key concerns for one third of businesses in a post-Covid economy

The announcement of more government-backed loans on the way is welcome. A recent survey by Chartered Accountants Ireland indicates liquidity and cashflow are key concerns for a third of businesses. There is a low bar for businesses to be considered for these loans. They have to have been negatively affected by Covid 19 by at least 15% reduction in turnover. AIB, Bank of Ireland and Ulster Bank have committed to the €2 billion scheme of which the government will be guaranteeing 80%.

Many business owners we speak with have not qualified for bank loans, yet liquidity and cash flow support is badly needed. Sometimes an urgent requirement has emerged. Funds are needed in a quick turnaround that’s more suited to a Fintech than a bank. Here are some of the primary alternative solutions that might work in these situations:

Peer to peer loans

Currently the lenders are increasing amounts that can be funded. In the early days of Covid 19 some of their funders had taken a pause which meant the P2P lenders were more reliant on their crowdfunders. The good news is that funders are returning and with increased confidence. You can expect to get an unsecured loan up to €300,000 for a term of up to 3 years. There is a return of a 5 year loan capped at €100,000.

Secured Loans

During Covid 19 businesses that have assets such as machines and vehicles or land & buildings could refinance them to release working capital. The credit teams have an easier time in approving a loan when they have collateral. Refinancing land & buildings can have some set fees that make it attractive for seeking hundreds of thousands of Euro but not for lower amounts. Whereas using machines & vehicles is less complicated and can be suited to tens of thousands of Euro.

Invoice Finance

As business in Ireland opens up more credit teams are more open to financing invoices owed by companies in your book of debtors. There are one-off, ad hoc and ongoing finance facilities available, with up to 95% of the debtor value funded. If there are any debtors that are considered too high-risk currently, they can be reassessed for funding at a later stage as Covid 19 stresses ease.

Trade Finance

During Covid 19 certain businesses involved in trade have picked up such as PPE and eCommerce businesses. Trade finance helps them finance their purchase orders with someone elses money, thereby keeping vital working capital in their business. If you are ordering product from China for example, often you need to pay 50% immediately and 50% on delivery. Your money can be tied up for weeks and trade finance can help with this.

Merchant Cash Advance

Businesses such as hotels, restaurants and retailers who take a lot of payments by card can get a fast loan based on the turnover on their merchant statements. It’s reasonable to expect, if you’re doing €100,000 turnover by card a month you might be able to get a €100,000 loan. The credit teams can easily top up a facility again if needs be. Merchant Cash Advance also works for eCommerce businesses using data from Stripe, PayPal, Shopify etc. There is now a lender on the market who finances B2C stock and digital advertising. They plug in to your analytics and make a loan offer using this data. They have been known to ramp up funding quickly based on performance.

There are many other loan options on the market and we’re happy to help get your finance quotes so you can get the best deal. Call us 7 days on 01 55 636 55 or use the web chat box in the bottom right corner of this page.

Business Loans Covid 19


Quotes:

“The survey, conducted by Chartered Accountants Ireland among almost 2,000 members on the island of Ireland, also shows that liquidity and cashflow are key concerns for one third of businesses in a post-Covid economy.”

https://www.rte.ie/news/business/2020/0717/1153861-chartered-accountants-ireland/

“AIB, Bank of Ireland and Ulster Bank have committed to offering loans to small businesses under a €2 billion State guarantee scheme at costs that will be “significantly below” market rates, said Tánaiste Leo Varadkar.”

https://www.irishtimes.com/business/economy/state-guaranteed-sme-loans-to-be-below-market-rates-t%C3%A1naiste-says-1.4306439

BusinessLoans.ie MD Rupert Hogan Interviewed by deBanked Magazine

In a recent interview with reporter Brendan Garrett of deBanked Magazine, New York, entitled “Ireland’s Alternative Finance Industry and the Coronavirus” BusinessLoans.ie MD Rupert Hogan gave his insights on business finance in the current climate alongside Jamie Heaslip of Flender Finance, Chris Burge of Spark Crowdfunding and Garrett Cassidy of Trezeo.

Rupert Hogan “explained that some businesses would be better going with LEO over banks and even some non-banks. Noting that non-bank lenders can’t compete with the rates offered by LEO and, just like in the US, banks can’t act with the speed that these business owners need. And described the current situation as The Great Lockdown and banks aren’t too helpful, even in the good times, due to the high rejection rates that SMEs experience when looking for loans. In regards to merchant cash advances, he’s expecting, when the MCA companies reopen, that they’ll be funding at reduced rates, some doing as much as 50% less than their pre-coronavirus amounts.”

The article concludes, “altogether, Ireland’s alternative finance industry, like others the world over, has been hit hard by the coronavirus’s economic effects. With the country’s phased lifting of the lockdown being plotted out over the course of the summer, the island nation may not see as quick a return to commerce as certain American states, but its fintechs and non-banks hope to stick around, by hook or by crook, as the Irish say, by any means possible.” We at www.BusinessLoans.ie agree.

Rupert Hogan MD BusinessLoans.ie & Sean Murray Editor deBanked when they met in Dublin October 2019.

Rupert Hogan MD BusinessLoans.ie & Sean Murray Editor deBanked when they met in Dublin October 2019.



BusinessLoans.ie - Year In Review

It’s been just over a year since www.BusinessLoans.ie got started and I’m pleased to say it’s been a great year. I had started forming the idea for the business when I worked at a peer-to-peer lender in Dublin. They offer unsecured finance and the loans are filled with funds from ordinary investors who choose to chip in on business loans. They are helping the Irish economy while at the same time getting a far better return than leaving their funds stagnate in a deposit account with the bank. So while I was working there I realised that the rejection rate was quite high. There were many other non-bank lenders on the market but few options to make multiple loan applications from the one place, hence I decided to set up a solution to this problem.

To give you an idea of the kinds of businesses our team have helped read about some of the finance deals we organised in 2019:

Scaffolding Company - Financed for €150k

We had a sole trader scaffolding company that was having trouble getting approved for a loan from their bank. There had been some history from during the recession years in Ireland that affected so many people in the construction industry, however the banks are less understanding than the non-bank lenders that these people were mostly victims of circumstance. This lack of access to finance was strangling these companies ability to grow; and business was booming and this client was turning away business. We found our client approval within 24 hours of receiving a few easy-to-get documents.

Cattle Exporter - Financed for €120k

If a complicated overseas transaction hits a bump it can hurt your cash flow. This is what happened when a sudden change in the value of a currency affected a big cattle deal, leaving hundreds of cattle in a yard needing to be fed until the next deal could be lined up. This can take months so we organised some much-needed working capital to keep the business running smoothly after this business hiccup.

Beautician - Financed for €4k then €5k then €8k

We deal with smaller loans for young businesses too. We spoke with a beautician whose business was around 9 months old. Her turnover was modest but regular but the bank wasn’t helping. Fortunately she had a business that used a card machine and based on her volume of monthly transactions we were able to organise a merchant cash advance. Then she came back a couple of times during the year to top up with more loans as she grew her business.

Property Developer - Financed for €100k

A property developer had the perfect deal. Everything was pre-sold to the local council for social housing in a very low risk situation, however the banks were not on board. What was most perplexing for the client was that they had spoken with many non-bank property lenders who are supposed to be more flexible but were not of much use to them. The site to be built was rural, near a little village in Cavan and this location was deemed unattractive to all the lenders they had engaged with. They didn’t need a lot to get going. Just €100k to finalise a contract and commence works and they would receive some staged payments to get their work done. Time was also of the essence. www.BusinessLoans.ie was able to assist and they got on with their construction.

Importer / Exporter - Financed for €500k

An opportunity came knocking for an importer of steel. The Turkish Lira crisis meant there was a lot of cheap steel to be imported. However, to protect our market the EU decided VAT had to be paid upfront and this was an issue for this business. The good news for them was they had a strong asset list; over the previous years they invested in machinery and it was mostly paid off. A loan by way or refinance was possible. We raised a €350k secured loan from this as well as a €150k loan unsecured and they we’re able to make hay while the sun was shining for their steel deals.

We hope you got a taste for the kind of situations we can help get loan quotes for. We will keep on trying and won’t stop until we have got you the best deal available; or at worst exhausted all avenues. Thanks to all our clients for an amazing 2019 and we look forward to growing with you in 2020. Don’t forget we’re still manning the web chat box you see in the bottom right of this screen and on our site over the holidays. If you’re making your new year business resolutions and that involves finance, we’re with you all the way.

To all our clients.jpg





Financing Options for Irish Business Owners

As a small-business owner, you should understand the financing options available to you to help grow your company. Many new small business owners have difficulty accessing capital through traditional banks to start or grow their firms. Small business lending companies can help to provide financing even though they have challenged credit. There will be a premium charged through interest rates and other fees for access to capital but being granted necessary funding is most important to owners and lenders have to balance risk with reward. Many small businesses have begun seeking alternative finance to meet their smaller financing needs. Peer to peer lending is becoming more commonly used by small firms to finance projects that will help their companies grow.

So you may ask, why don’t I just use my cash flow to fund the business? When you fund a business yourself, it can be wonderful if things work out, but disastrous if they don’t. If you don’t get outside funding, those growth opportunities are limited by the size of your own funds and what your business produces in cash flow. Slow, steady organic growth may be fine for some businesses, but for others, particularly in fast-moving areas like technology, it can mean ceding the advantage to your competitors.

Bank lending is still tight. Research shows that for the first quarter of the year, gross new lending only increased 2.7 per cent over the previous 12 months, driven by primary industries (11 per cent) and hotels and restaurants (3.7 per cent), with declines in other sectors, according to SME market report from Central Bank.  According to the research conducted by the Red C 60% of SMEs were using personal funds to invest in growth in their business. 

It’s important to note that, while interest rates have fallen dramatically since 2008, the average revolving credit rate has actually risen. Alternative lenders have been able to leverage their superior operating efficiency to offer more attractive pricing to consumer and small business borrowers while also delivering a superior service experience.

Here are three major benefits of alternative financing that you need to know, and that banks simply can’t deliver:

  1. Banks take several weeks — or sometimes several months — to review loan applications.

  2. There are many other factors to consider, and credit scores are just one piece of the puzzle. That’s why we routinely approve borrowers who have impaired or bad credit.

  3. Alternative business loans fund quickly, which is one of their biggest advantages. In many cases, you’ll hear back from your lender within 24 hours, and get your loan funded within 48. This is an ideal solution if your business needs cash quickly to take advantage of a business opportunity or get over a short-term cash flow hump.

The flexible and affordable funding solution you want, need and deserve is via alternative finance. BusinessLoans.ie is here to help you navigate alternative finance to get the best finance deal for your business. Call us now on 01 55 636 55

businessloans.ie - WHAT WE DO.

If you're a business owner your usual port of call when you need finance is to look to your bank. Yet, even as we hear positive signals in the media about the Irish economy, the stock of SME credit available in Q1 2017 was down 8.2% compared with Q1 2016. Small and micro-sized companies are worst hit by the increased bank rejection. Even if the bank does approve you for finance, the process can be very time-consuming and stressful. You may endure requests for reams of documents and get eventual approval but subject to additional security such as signing over your family home.

So what can you do about it? The great news is that there are alternative finance options such as private financiers and P2P lending. Many of these options bypass the behemoth bank bureaucracy and replace it with a common-sense approach. You can expect a quick decision based on supplying a couple of easy-to-get documents. Generally you can go the unsecured route and not have to worry about paying penalties if you want to pay your business loan back early. Businessloans.ie is partnered with the best alternative finance options in Ireland today. If you have a business project in mind we will be happy to listen, answer any questions you have and connect you with the best finance deal to grow your business.