Joint venture set to shake up SME emergency funding
US finance provider and UK peer-to-peer platform to set up in Ireland
IFG says the war chest to which it has access to through its agreement with Assetz means SMEs lose less by choosing it rather than other providers. Photograph: Chris Ratcliffe/Bloomberg
Cash-starved small and medium-sized firms will soon be able to access emergency funding in a matter of hours in what is being promised as a major shake- up in the way companies raise capital.
A joint venture involving the California-headquartered alternative finance provider Interface Financial Group (IFG) and Assetz Capital, one of the UK’s fastest-growing peer-to-peer platforms, is to establish operations in Ireland within weeks.
Founded in 1972 and with 150 offices across North America, Europe, Australia, New Zealand, South Africa and Singapore, IFG offers invoice discounting or “spot factoring” services. These typically involve buying unpaid invoices from SMEs at a discount and then receiving the full value of the bill once the customer pays up.
The advantage for small firms is that they can get paid within as little as 24 hours rather than having to wait for months, while IFG says it gains because the majority of invoices are settled quickly.
Stockport-based Assetz has lent more than £80 million since it was established in April 2013 and expects this to have risen to £1 billion by the end of next year. It has formed a number of partnerships of late, including one with Royal Bank of Scotland (RBS). The company teamed up with IFG in January to launch the new joint venture and the move into Ireland marks its first expansion outside of the UK.
“We’re interested in anyone who supplies goods and has a recognised customer at the end. They can use this service today and then maybe never again, or come to us a number of times if needed. Our role is simply to provide funding quickly and without fuss,” said Mark Monument, franchise and business development manager, IFG.
IFG operates on a franchise model in which individuals – who pay €30,000 to become a franchisee – are charged with finding and assessing firms looking for quick access to funds.
The company said it typically works with small, expanding companies who for whatever reason find it difficult attracting conventional funding.
“Often firms get referred to us because they are in a bit of a hole. They may have to pay bills quickly or might have just landed a new contract and need to take on staff, buy equipment and so on and not have access to resources. This is particularly the case with newer companies working in areas like manufacturing or construction who might not have built up an attractive credit rating as yet or who want to hold off going to the banks until they are more established,” said Mr Monument.
He said clients tend to stay on average up to 18 months before moving on to more conventional services and said that during their time with IFG they might avail of its services anywhere between one and six times.