Ashley Business Finance, which provides finance products for small firms, paid out £75m to over 900 different businesses throughout England and Wales in 2014 – its highest ever amount to date.
The figures were a significant rise on 2013, when Ashley provided £68m to 820 businesses. Invoice finance and business loans were its two most popular products in 2014.
Jonathan Cranston, the company’s chairman, said the demand reflected the continuing credit squeeze for smaller businesses and late payment by big companies, amongst other trends.
“Invoice finance plays a valuable role in freeing up cashflow in small firms and supporting those which are supplying bigger customers,” he said.
“We find that small firms are squeezed from both sides at present. While their major retail clients are demanding 90-day payment terms, their own suppliers are tightening up credit control and insisting on prompt payment.
“We have also seen a rise in the number of start-ups using invoice finance, not only as a means of funding but because they lack their own credit control systems to chase payments.”
Ashley’s business loans, which provide up to £100,000 for a period of up to 18 months, are a new product introduced in early 2014 in response to the continued difficulties small firms face in accessing funding.
Jonathan Cranston added: “Mainstream lenders have becoming increasingly stringent in their criteria. We see many sound firms which have been declined bank funding over very minor issues, so those with a real element of risk would have no chance.
“We consider each case on its merits. As many insolvencies are caused by temporary cashflow problems, funders like Ashley which are prepared to give them a chance, can very often save the business.”