Nicoll Financial Solutions Limited

Over the past year more than one in ten (12%) of small business owners in the UK have had to put their own homes on the line as a guarantee for a loan to continue doing business in 2011.

This is according to new research from borro the personal asset lender.  The survey of 300 owners and directors of small businesses also showed that a further third of small business owners (33%) would consider using their home as a guarantee if they couldn't get any other kind of finance to help with issues such as cash flow problems, late customer payments, tax bills and staff wages.

With bank confidence still at an all-time low small business owners have had to turn to their personal funds to boost their businesses.  The survey found that over half (57%) of small business owners have used their personal funds to inject capital into their business and 17% have asked friends and family for additional funds.

Borro are finding that small business ownersa re looking further afield to get the funding they need.  A quarter (26%) said they have used or would consider using their personal assets such as cars, jewellry, antiques etc. to secure a loan for their business.

NFS is an accredited representative of borro, and can assist in arranging such transactions.

Over the past 12 months almost one million people have taken out a payday loan to help pay their rent or mortgage, according to a new Shelter survey.The chief executive of Shelter said "these shocking findings show the extent to which millions of households across the country are desperately struggling to keep their home.  Turning to short-term payday loans to help pay for the cost of housing is totally unsustainable.  It can quickly lead to debts snowballing out of control and can lead to eviction or repossession and ultimately homelessness."

Payday loans carry extremely high interest rates.  NFS can offer secured loans (see Find and Compare Loans page on this website) or unsecured loans (contact us for more information).  In both cases APR will be a fraction of that charged by payday loan companies.

Asset finance has been playing an increasingly important role in funding business expansion.  In the past 12 months a total of £20.9bn of asset finance has been supplied, up by 8% on the previous year.

The chief executive of Syscap said "The eurozone crisis has sent the average business overdraft rates shooting up to their highest level in nearly 3 years, despite stability in the central bank rate.  Ths is causing real pain for small businesses, whose overdraft rates are always much higher than the overall average, and who can be paying up to 3% on top of that in additional charges. Unfortunately, with banks still failing to make other types of loan more widely available, an expensive overdraft is frequently the only form of business borrowing available from high street lenders.  As a result it's hardly surprising that small businesses are looking to leasing and other forms of asset finance for more sustainable alternatives to funding investment."

RBS has announced it plan to increase small business lending by 15% by lowering interest rates, cutting upfront fees, and ending early repayment penalties.

This initiative is said to be "part of a drive to get behind the economic recovery" and the bank expects that a company borrowing an average small business loan of £75,000 would save as much as 60% on the cost of the loan over 3 years.

This move came ahead of RBS's latest results - pre-tax profits of £2bn in the 3 months to 30 September 2011, compared to a loss of £1.6bn in the same period one year prior.

The MD of RBS Business Banking in Scotland said "A circuit breaker is needed to restore confidence for small businesses, that's what RBS is hoping to provide.  We've set an ambitious target of 15% in the next 3 months, and we're backing it up with our best ever offer to small firms."

The British economy may already be contracting according to Monetary Policy Committee member Martin Weale.  In an uncharacteristically bold statement for a member of the MPC, Mr Weale said the country is experiencing the weakest recovery of any recession since the First World War, almost 100 years ago.  He intimated that there is a higher risk of a double dip recession than previously thought. " I certainly do think that the underlying rate of growth of the economy is weak now, and I wouldn't be terribly surprised if we were to see output contract in the fourth quarter" he said, blaming the eurozone crisis for "the knock-on consequences for our banks, for business confidence, for the way consumers feel about things."

Increased use of accounts receivable (AR) finance by UK SMEs could provide the additional working capital to create more than 300,000 new jobs by 2020 according to a new report commissioned by GE Capital.

The report examines the current and future economic impact of AR finance across the UK, France, Germany, and Italy, and the CEO of GE Capital said "AR finance plays a key role in enabling UK SME's to take advantage of growth opportunities, improve casfflow, and enhance business flexibility. For the first time this research has been able to quantify those benefits to the UK economy and it's clear that, at a time when the UK is desperately searching for growth, greater awareness and uptake of AR finance is one way that such growth could be found.  What this report clearly shows is that the availability of this form of finance is absolutely key for the UK economy to grow and recover."

According to the reort's findings more than 250,000 jobs in the UK are currently reliant on the availability of AR finance, and without this source of finance the UK ecenomy would immediately contract by £4.9bn per quaret in Q4 2011.

The majority of the UK's SMEs (61%) are not using management accounts or forecasts for financial planning according to a new survey.  Less than one third of SMEs (31%) agree that they have the right finance processes for their business to ride the recession.

The research highlights the need for better finance planning in UK SMEs, with only 12% agreeing the financial management information provided to their business was very useful.  Almost a quarter (22%) also said that better forecasting would have put their business in a better position to cope with the current economic climate.

The resarch was commissioned on behalf of a major specialist company supplying on-line support services to SMEs.  Their founder said "it's worrying that so many SMEs don't fully understand the key elements of finance planning, or use forecasting as a key tool to manage their business.  Adopting forecasting as a key discipline can mean the difference between success and failure in the current economic climate."

NFS can provide a reasonably priced bespoke business planning and forecasting service to SMEs or larger businesses.  Additionally we can tailor management information systems to your needs, and provide a management accounting service.  Contact us through the enquiry form on the Contact page for more information.

This is when firms, unable to secure funding from the banks, approach what they believe are legitimate brokers for help.  The fraudsters tell them that they can find loand, but ask for an upfront administration fee, often followed by further requestes for fees for 'due diligence' or 'added work'.  Inevitably the loan never appears and the fees are not returned.

Advance fee fraud first came to light during the recession of the early Nineties, and involves many variations on the same theme - pay up front for loans that are never provided.  This damaged the reputation of commercial finance brokers, and in 1992 the National Association of Commercial Finance Brokers was set up to improve the reputation of genuine finance brokers.  Chief executive Adam Tyler recently said "After we set up, the advance fee fraud virtually disappeared.  However, it made a reappearance in 2008 and in the past six months it has exploded.  Many small firms are unaware that there are many alternative lenders to the High Street banks.  A genuine broker can help them, but we are not talking about genuine brokers - these are fraudsters looking to make easy money."  Tyler said that he had passed 'more than 250 cases' of advance fee fraud to the National Fraud Authority, a government agency, in the last two years, with an average individual loss of £5,000 per case.

Clients with question marks about a broker can contact the NACFB to ascertain if the broker they propose to deal with is a member of the association.

In the six months to July 67% of respondents to a regular Hilton Baird survey saw an increase in the time it took customers to pay invoices, typically to 22 days beyond agreed credit terms.  84% are now spending more time chasing customers than they were at the start of the year.

Late payment on this scale is simply not sustainable and sends damaging shock wages along the supply chain.  The most common excuse was that customers own customers were delaying payment, making the cycle very hard to break and leading in some cases to business failure.

The payment gap is widest for small businesses with a turnover of less that £500K - those who can least afford it.Despite extending the lowest credit terms - typically 28 days compared to 33 days amongst larger companies - customers took an average of 51 days to pay, 23 days over terms, more than 6 days longer than their larger counterparts, thus creating major cash flow problems during already difficult trading conditions.

NFS can help - if your business is suffering because of late customer payment, discuss invoice factoring with us - payment for up to 85% of your invoice can be in your bank account one day after you raise it!

Three quarters of SME's think that bank lending margins on loans are too high, research from Syscap has revealed.  89% of businesses consider the arrangement fees on loans to be too high, up 8% on last year.

Steep loan arrangement fees make it uneconomical to borrow and in combination with high lending margins, the result is that SME's are increasingly looking to non-traditional finance providers.  The reasearch also showed an increased demand for finance from SME's, with 42% of businesses reporting that their requirement for finance has increased over the last three months, up from 27% during the same period last year.

Syscap explained "the banks' explanation for their low lending figures is that businesses are not sufficiently confident in their growth plans to need finance.  These results suggest that the reality of the situation is that businesses do want finance, but they are put off loans by high margins and excessive arrangement fees."