Liberis joins funding portal as Queen’s Speech could reveal mandatory referral by banks

Hospitality sector funding provider, Liberis has become the first revenue-based funder to join the rapidly-expanding finance portal – which aims to  support SMEs requiring non-bank funding solutions.

Liberis’ inclusion foreshadows a widely speculated announcement in the Queen’s speech (4 June) which could compel banks to refer SMEs they have rejected for loans to alternative funding options. Liberis is a significant addition to the funding portal – broadening the range of funding options on offer, especially for micro (0-9 employees) and small businesses that are often turned down for bank funding.

 Worryingly for SMEs, OnePoll research, commissioned by Liberis and launched today, shows that almost a third of micro businesses[1] (32 per cent) have been turned down for bank funding. As a result, almost two thirds (60 per cent) had cashflow problems or missed a business opportunity. The research also shows micro businesses (62 per cent) are less likely to seek alternative funding sources than their larger SME counterparts, mainly because they don’t know where to look.

The OnePoll research also found that almost two thirds of micro businesses (60 per cent) said being aware of an online portal explaining different alternative funding options would be useful. The Breedon Report recommended in 2012 that a system of ‘signposting’ rejected customers from the banks to the alternative non-bank sector would be highly effective in distributing SME finance.

 Liberis is the UK’s largest provider of business cash advance and has facilitated funding of more than £75m to SMEs, with a customer renewal rate of 75 per cent. It provides businesses with a cash injection, from between £2,500 and £300,000, based on future credit and debit card sales.  Payback is only made as the business earns, so mirrors cash flow. It’s unsecured funding so no asset-backed guarantees are required.

 Liberis CEO, Paul Mildenstein said: “It’s great to be part of this unique resource for SMEs that are unable to get bank funding, or are looking for a genuine partnership approach to funding their business. We bring to the portal another valuable and unique funding source, especially for micro and smaller businesses that need flexible finance that fits their business. The portal has fast become an indispensible source for all SMEs; so finding an appropriate source of money has never been so straightforward and with such high success rates.”

 Since launching in March, the portal, which brings market-leading alternative financers together for the first time under one umbrella, has already helped thousands of business owners discover alternative funding options suitable for their business, through its free, simple to use funding traffic-light system.

Adam Tavener, chairman of and catalyst for the collaboration, said: “We’re delighted that Liberis has joined the portal as it provides another alternative type of funding for businesses owners, particularly those at the micro end. And, with Zopa, Angels Den, crowdfunding and pension led-funding on the portal we have many options, including those for under-served start-ups that may have no filed accounts or strong credit histories – often required by banks and Peer-2-Peer or invoice trading.”

Other key findings from the Liberis research included:

  • 32 per cent of micro-businesses were turned down for bank funding. Two thirds (66 per cent) of micro business required less than £10,000.
  • Nearly half of micro businesses (49 per cent) wanted funding for cash flow, 46 per cent required it for growth/business development and nearly a quarter needed funding for new stock.
  • Almost three quarters of respondents from micro-businesses (70 per cent) said that being turned down for bank funding increased stress, with a fifth reporting a negative impact on their health.
  • Over a third (40 per cent) of micro-businesses say that cash flow management is their biggest business worry.
  • 36 per cent of micro-business respondents had sacrificed personal savings for their business, 37 per cent family holidays, and 35 per cent quality evening or weekend time with their families.

 Fewer micro-businesses are applying for bank funding

Q1 2014 data from The BDRC Continental SME Finance Monitor last week (29 May) showed that fewer micro-businesses are using core finance such as bank loans or overdrafts than in 2012 or 2013. The same research, which interview 10,000 SMEs each year, found that fewer micro-businesses plan to apply or renew a bank funding facility now than they were in the previous two years.

Lord Young’s Report on Growing Micro-businesses, published in May 2013, identified the huge contribution the UK’s 4.6 million micro businesses make to the country’s economy – accounting for 7.8 million jobs and 20 per cent of private sector turnover. Lord Young commented in the report: “A criticism I hear from businesses is that they don’t know where to find finance when they need it. These businesses not only report the difficulty of accessing bank finance but also remain unsighted about alternative finance options available to them.”