FINANCE
By Darren Hurdle, Corporate Finance Director Kreston Reeves
FUNDING GROWTH THROUGH ASSET-BASED LENDING A survey by banking giant Santander reported in March that business confidence is at its highest for three years with businesses looking to grow at home and overseas. Yet funding growth can be a real challenge for COVIDaffected businesses, and many are turning to asset-based lending. Darren Hurdle, a Corporate Finance Director at Kreston Reeves, explains why. Businesses will need different funding sources at different stages of growth. New businesses will often turn to family
❛❛ Asset-based lending is, in
short, borrowing money against, and secured by, assets owned by the business or invoices raised ❜❜
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and friends, banks or venture capital and angel investors to give them the financial kickstart needed. But that is rarely suited for businesses in growth stages. Businesses may have historically turned to their banks to help fund growth, however that avenue is for many businesses closed due to not meeting their strict lending criteria. During the COVID-19 pandemic, CBILS and Bounce Back Loans were a valuable funding source for businesses, but that avenue is now also closed. The new Recovery Loan Scheme, which opened its books on April 6th, is offered on commercial terms and will undoubtedly prove popular. This route, however, will not be suited or accessible to every business and, at the time of writing, is limited in providers.
