Blog20 Sep. 2017

What’s the biggest challenge facing your business?

A recent SME survey identified the key challenges a growing business has to contend with. The answers weren’t surprising, namely; “skilled labour shortages”, “the burden of red tape”, “wanting to maintain a work/life balance” etc. Near the top of the list, as always, was “access to working capital.”


Here at Cash Flow Funding we feel the real problem is not so much access to working capital but rather access to “affordable” working capital. In an era where the cost of a home mortgage is near an all-time low and the OCR (Official Cash Rate) barely moves from quarter to quarter why is it that a SME struggles to get bank overdraft funding for anything less than 15-16% pa unless you have property to leverage against. Even then you’ll pay well in excess of the listed mortgage rates.


Given that the average cost banks pay for their own funding is less than 3% pa there is a need to ask why an overdraft for a SME is so expensive. It would appear the SME borrower is being used to subsidise the low return banks are making on residential mortgage lending.


Some opportunists are seeing this as a chance to jump on the bandwagon and come out with even higher cost loan facilities albeit packaged with bells and whistles. There is a growing plethora of online lenders focussing on speed and not cost, and quoting flat rates not true rates (or not even quoting rates at all).


Somewhat akin to the high-flying finance companies who came to a rather sad demise near the end of the last decade these online offerings come with a lot of bells and whistles but are really just short term P&I loans that often only act as temporary relief, albeit at a significant cost to the borrower.


You don’t have to look to far to see that there are alternatives available and that CFF is a solution to your woes.


  - Our working capital facilities offer funding at 10.5% pa for well a managed and secure business.
  - A full service factoring facility typically costs 12% pa + administration.
  - If you do have property available as security we have a relationship with a major bank who can offer residential rates even when the funds are to be used for business purposes.


So, if you’re looking for affordable and flexible working capital to grow your business give us a call.

Simon