Small firms struggling to get overdrafts – but what alternatives are there?

Small businesses are continuing to bear the brunt of uncertain lending conditions, as many report they are unable to obtain bank credit at any cost, it was warned by the Bank of England yesterday.

Some are even seeing existing overdraft facilities being withdrawn, which can have a major impact on businesses that use overdrafts to help manage cashflow gaps and keep everyday operations running smoothly.

But not every business is able to survive the lending drought, as more than 50 a day were said to be failing according to a separate report, as 1,564 failed in April.

The Bank’s report on business conditions suggested that many firms are giving up on their bank, with some looking elsewhere for finance.

The report stated, “It had become harder to secure long-term funding from banks, increasing the frequency of re-negotiations and attendant charges.”

“Some firms had responded to tighter credit conditions by seeking alternative forms of finance”.

Invoice finance as funding alternative

Many businesses, ranging from new-starts and SMEs to owner-managed firms, are taking out invoice finance solutions, such as invoice factoring and invoice discounting, to help improve their cashflow.

They work to release cash you may have tied up in unpaid invoices, which otherwise can take up to 120 days to be paid.

Why not browse our website to find out a bit more about how invoice finance works and may just be what you need to unlock your cashflow.