Have the banks stopped lending, or just moved the lending criteria goal posts? It’s understandable banks need to rebuild their balance sheets, but this should this be to the cost of customers who’ve enjoyed good relationships and extended lending facilities for many years with their bank? It’s clear that the current restrictive lending criteria applied by banks doesn’t fit with the need to increase lending to SME’s.

There is good news however; there are alternatives. Businesses seeking finance have options outside of traditional lending from banks. One of the more established alternatives is factoring or invoice discounting, both of which offer immediate funds based upon the strength of a business and it’s outstanding debts.

A new twist on traditional factoring and invoice discounting has become available in the last year. Selective Invoice Discounting is new to the UK; designed primarily to be flexible, this product offers short term finance to match exactly the needs of a business to raise funds. It works by allowing companies to get an immediate advance on selective invoices but without any of the normal long term commitments or tie-ins normally associated with financial products. The biggest advantage this offers over existing alternatives is flexibility; businesses are able to offer selective invoices to a facility as and when they need to increase working capital without over committing themselves to their lender.

It is encouraging that when sources of traditional funding dry up for small to medium sized businesses there are inventive, viable, business focused and flexible alternatives which support business when it needs backing most.