Introduction
The government has announced a new initiative to diversify business finance, which are led by industry experts in the UK from both the business and finance.
British companies still rely heavily on bank loans to finance their activities, although there are many alternative sources of funding available to them to meet today's evolving market.
The government wants to make sure the light of recent and ongoing reforms in the banking sector, the flow of capital for companies maintained. Other sources of funding will be critical to help companies provide the broadest economic growth in the UK economy needs.
The panel will seek to establish a framework for alternative sources of funding through collaboration with companies and business associations investors to coordinate the financial institutions and providers of alternative sources of financing and facilitating the availability of financing that businesses need.
Bank loans
Though it is an increase in new loans was included major banks this year, many companies still dissatisfied with levels of bank loans and how they were treated by their banks.
Criteria of the credit crisis, the non-renewal of overdraft facilities and poor communication from banks are cited achievement of common problems of the company as a result of their fundraising goals difficult.
Without the funding they need, the British company is struggling to survive and grow, and so the British economy the same. That is why the government, increasing not only the introduction of measures to encourage bank lending, but will also promote competition to the financial market as possible. A wide range of alternative sources of finance for UK businesses
Alternative funding
There is already a wide range of alternative sources of funding that are the company.
One of the biggest obstacles to the increased use of these funding sources is simply the general consciousness. New and emerging providers of other financial products do not have the infrastructure sector, which makes it an efficient and effective distribution of their products.
The other important factor is that many owners and managers of small and medium enterprises, which are the backbone of the UK economy, are not aware of the range of alternative funding available and where to find them.
New methods of communication are needed, and it is hoped that this will be one of the main objectives of the initiative of the government.
Invoice Finance
Invoice Finance is one of the most popular options in the portfolio of alternative finance and has grown considerably over the last fifteen years, from about 13,000 businesses to use the UK to more than 50,000 customers today.
This method is extremely flexible business financing cash advances against unpaid sales invoices. There are variations in the invoice finance family of products, invoice factoring and invoice discounting involves.
Credit institutions in the bill will advance up to 95% of a company's invoices unpaid sales and use the sales ledger safe under assignment of the bill and if the debt held by these students.
If the invoice is paid by the client company, the invoice finance company will pay the balance of the bill, which was not funded after the deduction of expenses. It has progressed normally a fee for the installation and an interest in the amount of resources.
One of the main benefits of invoice finance is that to increase the installation, as the company grows, so actually a very effective way to fund working capital.
