UK businesses want flexible funding options now more than ever before. In the final three months of 2019 lenders tightened up on businesses lending with the toughest squeeze on the availability of credit since the 2008 financial crisis, according to the Bank of England’s credit conditions survey. The widespread retrenchment of banks in the last decade has resulted in the rise of the alternative finance market. This has given businesses much-needed access to a wider range of financing options for their business ambitions.
According to research from BVA BDRC, a greater proportion of SMEs used external finance last year than in any year since 2012 with 46 per cent of SMEs using external finance compared to 36 per cent in 2018. The research also found that attitudes towards finance, however, have changed little over the years as SMEs remain risk averse. To help address that, here we explain the benefits of secured lending and why it might be right for your business.
Two of the most common debt funding options are secured and unsecured lending. Unsecured lending is financing which is not supported by the borrower’s collateral. By contrast, secured lending is a type of business finance that is backed by a security in the form of assets that your business owns. Secured lending is also called asset-based lending and its main advantages will be larger loan amounts, more permanent capital, lower costs and greater flexibility.
At Ultimate Finance, we support the ambitions of UK businesses exclusively through our secured lending options. As a specialist asset-based lender, we can support your business ambitions through our relationship-driven approach to flexible funding. Our funding can support a wide variety of business situations including working capital pressures, refinancings, asset or property purchases, businesses seeking acquisitions, turnaround and MBOs.
Businesses use funding for many different purposes. For example, an engineering company might use secured lending to borrow against the value of unpaid invoices to buy more stock to keep up with customer demand. Property and other assets including machinery and vehicles can also be used to secure funding against.
One of the main benefits of secured lending for businesses is flexibility. We can offer a higher degree of flexibility, at a lower cost over a longer period of time because there is tangible security in the form of an asset.
While an unsecured loan is typically a one-off financing solution, secured lending can help your business in the long term, something that’s more important than ever before. Given the uncertain economic times we currently face, resilience and sustainability are our key priorities at Ultimate Finance.
At Ultimate Finance we have pledged to help businesses prepare for Brexit and beyond by providing the right funding and non-financial support for our clients. We’ve signed up to the SME Finance Charter, which lists five pledges for lenders to commit to in order to continue to support SMEs. These pledges include a commitment to being open for business and ready to lend; helping you prepare for Brexit and beyond; supporting your application and signpost other options if needed; treating you fairly at all times, and working with the government-owned British Business Bank to support SMEs.
When it comes to financial support, secured lending allows us to create enduring personal relationships with our clients. We want to ensure the businesses we work with are here for the duration and we invest in those relationships with a long-term view.
Beyond the financial advantages secured lending can offer, it also provides a degree of professional support you can’t get from other financing options. Secured lending from Ultimate Finance comes with a business relationship. We provide our clients with a dedicated relationship manager that works in partnership with them to tailor funding facilities around changing business needs and growth.
It’s our job to understand what challenges your business faces and to work together to solve them, be that a cash-flow issue or upcoming investment. We offer funding and relationship support with the client and in return, they give us a commitment over their assets. In this sense, secured lending is a win-win for both the lender and borrower and we’ve been specialising in this for nearly 20 years and have provided over £10bn of funding in that time.
