FINANCE APRIL 2019
FINANCING
THE FUTURE
Smaller manufacturers have traditionally struggled to find finance
deals for new projects. A new breed of lender is changing that
BY CHRIS BECK
Today’s manufacturing sector is a hotbed
of small, agile and innovative companies,
all trying to find the niche in the market
that will set them apart from their
competitors. The same is true of those
tasked with financing this innovation.
Traditional high street banks are being disrupted
by start-up financiers, each of which boast of
quicker turnaround and better service.
For SMEs in particular, these new banks are
proving a hit. The latest Bank of England data
shows that there is around £10bn in unmet
lending to small and medium sized businesses
in the UK. Additionally, a study of 500 business
executives by the British Business Bank revealed
that many are unaware of the right type of
finance to help their firms grow. The impact
on business is stark. The British Business Bank
study shows that 27% of business executives
abandoned growth plans if they did not get the
finance they needed.
Thinking differently
But accessing finance needn’t be so challenging,
explains Ian Flaxman, managing director of
working capital solutions at Wyelands Bank –
especially if companies think differently about
their finance.
“Our own research has
shown that the average SME
manufacturer has more than
£10m of finance in potential
working capital tied up in
assets that could be used to
raise finance,” he says. “Quite
often larger businesses need
less financing because they
have more leverage with
their customers. Mid-sized
companies, however, can
struggle for this reason. Freeing
up these potential working
capital assets can provide the
finance that businesses need to
fulfil new orders and grow.”
Wyelands’ research also
found that OEMs have the
highest proportion of working
capital assets compared to
turnover, at 28% on average.
Manufacturers themselves
sit at 26%. These are prime
candidates for lending. “Too
many manufacturers are not
making as much of these
assets as they could,” explains
Flaxman. “By doing so, industry
can trade, grow and create jobs.”
Having access to finance
naturally leads to manufacturers
becoming more innovative –
something that will become
even more important as the
Fourth Industrial Revolution
takes hold, adds Greg Carter,
CEO of Growth Street.
“Innovation is a collaborative
industry,” he says. “Innovators
need other innovators and
new technologies to grow and
respond to new challenges.
They also need resources for
investment to compete on a
global stage.
“The big challenge – both
operationally and financially –
is to successfully integrate
these innovative technologies
in order to transform processes.
A company might want to make
the leap to more sophisticated
ways of working, but the
directors might need a relatively
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£10m
The average amount
of finance tied up in
assets by SMEs
Investment
is vital for
innovation to
flourish, says
Growth Street
CEO, Greg Carter
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