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Independent Funders Provide Quick Business Funding to Support SMEs During Economic Uncertainty

Last Modified : Jul 03, 2024

The UK economy stalled in April following moderate growth during Q1. When surveyed about their top concerns for 2024, economic uncertainty and financial stability ranked high as to what makes small and medium-sized enterprises (SMEs) owners most anxious.

Despite this, business confidence remains steady, with most firms expecting turnover to increase over the remainder of the year and a relatively low proportion anticipating a worsening financial situation. Profitability confidence has also remained stable, with a slight increase in companies expecting profits to rise in the latter half of 2024. Nonetheless, a notable minority anticipate declining profits, highlighting ongoing concerns amidst perpetual economic uncertainty.

Overall, economic uncertainty creates a challenging business operating environment, making it harder to predict future cash flows and plan for long-term financial stability. This uncertainty can erode confidence among investors, lenders, and consumers, further exacerbating cash flow challenges and hindering business growth.

Whether facing diminishing sales volumes or rapid growth, quick and reliable business funding provides the necessary capital to navigate economic fluctuations while establishing financial stability. This article explores the challenges and benefits of securing fast, flexible business financing as the UK braves continued economic headwinds. Keep reading to learn how leading independent funders provide quick business funding solutions to support stability and position SMEs for growth.

Navigating uncertainty with quick business funding

The year’s first quarter results from the British Chambers of Commerce Quarterly Economic Survey confirm that the UK economy has delivered little improvement in business conditions over the pervious two quarters. The percentage of respondents reporting increased domestic sales stayed at 36%, mirroring the results from Q4, 2023. Conversely, 22% experienced a decline in sales for the second consecutive quarter, while 42% reported no change in sales volume.

Economic uncertainty is peaking, highlighting the next government’s significant challenge in revitalizing the country after prolonged stagnation. In April of this year, the UK economy saw no growth. According to the Office for National Statistics (ONS), spending on services continued to rise but declines in production and construction offset gains. Some sectors within services, such as information, communication, and scientific industries, performed well, while retail trade struggled.

Maintaining financial stability has become a constant concern for business owners and leaders as moderate economic recovery spluttered to a halt at the start of the second quarter. Reliable cash flow is essential for navigating economic uncertainty as it provides stability, flexibility, and acts as a buffer against unforeseen risks and emergencies.

Quick business funding empowers SMEs to sustain operations and capitalize on opportunities during economic uncertainty. The speed of funding is crucial in determining the effectiveness of quick business funding options for maintaining reliable cash flow through changing conditions.

Speed of funding

Waiting weeks or even months for a loan approval or funding line from a traditional bank can mean stalled operations and missed opportunities. Independent funders recognize this urgency and have streamlined their processes to deliver quick business funding.

Through streamlined underwriting methods and quick decision making processes, independent funders can assess a business’s creditworthiness efficiently, often providing approval within days, if not hours. This rapid turnaround time ensures that businesses can receive quick business funding to survive sudden revenue loss, overcome an unexpected expense, or seize opportunities as they arise.

Accessing quick business funding

Historically, SMEs have faced hurdles in accessing quick business funding from traditional banks, particularly those with less established credit histories or in particular industry sectors. Independent funders have democratised access to capital by embracing a more inclusive approach to lending.

By leveraging the creditworthiness of a business’s customer base and assessing the value of their assets (receivables), independent funders can extend quick business funding to a broader range of businesses, even if their credit rating is low. This inclusivity empowers undercapitalized SMEs to obtain the funding they need to thrive and grow.

Flexibility in Funding

Each business has unique needs, challenges, and goals, making flexibility a key consideration when seeking quick business funding. Independent funders understand this diversity and offer a range of flexible financing options tailored to meet varying requirements.

Commonly used flexible financing solutions include the following:

Invoice Financing: This funding option is the selling of accounts receivable invoices to an independent funder at a discount. Instead of waiting for customers to pay their invoices, the business receives immediate cash, typically a percentage of up to 90% of the invoice value minus a fee. The funder manages collections and pays your business the remaining balance due when they receive full payment from your customer.

Invoice Discounting: Similar to invoice financing, but your company manages collections, maintaining control of your all important customer relationships.

Bad Debt Protection: This type of financing protection safeguards against the risk of customer non-payment. It typically covers losses incurred due to customer insolvency, serving as a safety net to mitigate the impact of unpaid invoices, default, and to maintain financial stability.

Independent funders typically offer customizable repayment terms and structures to augment business financing flexibility. This allows SMEs to align their financing terms and arrangements with their cash flow patterns when arranging quick business funding.

Customer-centric service

Customer/Client satisfaction lies at the heart of the independent funding industry. The best independent funders are committed to building customer and client relationships based on mutual trust through responsive service, transparency, and a solution-focused approach to complex issues. From leveraging enhanced risk assessment and decision-making processes to developing innovative financial products and services tailored to emerging market needs, independent funders are at the forefront of quick business funding solutions.

Furthermore, independent funders are often more agile and responsive to customer/client needs than traditional banking institutions. This agility enables them to adapt quickly to changing economic conditions, regulatory requirements, and customer preferences, ensuring that businesses have access to working capital when needed.

Conclusion

Economic uncertainty is a debilitating force that challenges the financial stability of undercapitalized SMEs. It emphasizes the importance of reliable cash flow and quick business funding in navigating economic fluctuations.

Independent funders provide accessible and flexible financing solutions tailored to businesses’ diverse needs, ensuring they can maintain operations, quickly adapt to changing conditions, and seize opportunities ahead of the competition.

In today’s uncertain economic environment, reliably accessing quick business funding can mean the difference between stagnation and growth. Independent funders play a crucial role in meeting the diverse financing needs of SMEs, with easy qualification requirements for businesses with creditworthy customers and valuable business assets.

To learn more about quick business funding solutions to benefit your business, contact eCapital today.

Key Takeaways

  • Economic uncertainty creates a challenging business operating environment, making it harder to predict future cash flows and plan for long-term financial stability.
  • Access to flexible financial resources, such as quick business funding, is essential to sustain operations and capitalize on opportunities during periods of low or stagnate growth.
  • Independent funders can assess SME’s creditworthiness efficiently, often providing approval within days, if not hours, to a broad range of businesses, even if their credit rating is low.
  • Independent funders typically offer customizable repayment terms and structures, allowing SMEs to align their financing terms and arrangements with their cash flow patterns and revenue streams.

 

eCapital Logo

eCapital Commercial Finance (eCapital) is a leading invoice financier providing funding facilities up to £4m to support the growth of SMEs through the provision of flexible working capital facilities. With five fully functional UK regional offices, its local teams are uniquely placed to respond promptly and purposefully to the cashflow needs of its clients. The business has grown significantly since its launch in 2001, providing over £4 billion of funding to businesses. It is majority owned by eCapital, a US based financial services business with interests in the USA and Canada.

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