Lending Hands – A Guide to SME Finance and Invoice Financing
When it comes to funding your business, it’s not just what you do, it’s also how you do it. In 1972, Richard Branson borrowed $10,000 from his aunt to build a recording studio, which eventually became Virgin Records, and decades later, a multibillion dollar empire. Branson is a perfect example of how appropriate lending can support businesses not only in times of distress, but also in times of growth.
Like Branson, if a company needs to buy equipment, vehicles or property before it can afford to purchase them outright, a vicious circle can begin to emerge. Many of our clients at Gulf Finance turn to us to break this circle through one of our key products, Asset Finance. Richard Branson’s method of gaining cash through family and friends is not uncommon among smaller businesses today, and although there are now much more effective ways for businesses to acquire funding, the asset finance principal is still the same. Branson’s aunt was able to advance the cash so that her entrepreneurial nephew could buy the assets needed to get his recording ball rolling. In turn, Branson could get the business going, steadily repay his aunt, and own the assets rather than rent them to build on his business. What’s more, if the business failed, he could have sold the assets to repay his aunt – or start an airline.
At the other end of the field, there are those businesses that have grown without the need for additional funding, but somewhere down the line have run in to the cash flow problems which will inevitably be thrown at us all. In 1918, Henry Ford raised $75 million to see him through the desperate times following the Great War. Two years later, he was the wealthiest business owner in the world. Again, Ford is a perfect example of how responsible borrowing can create vital liquidity in times of need.
With the lessons of a stunned economy fresh in our minds, specifically leveraging unmanageable debt, it is wise to think about alternative borrowing that won’t leave you overexposed should the market move against you.
At Gulf Finance, we have witnessed a tremendous shift in both the attitudes and methods of releasing funds. One of our core services is Invoice Financing, where a company can unlock the funds that are owed to them, rather than just elevating debt. The timeline between a product delivered and a payment received is steadily on the rise, but Invoice Financing means that we can support businesses through their own debtors, and lend against invoices which have yet to be settled – a concept which turns traditional small and medium business lending on its head.
Most companies depend upon a steady and constant cycle of funds, and at a time when traditional funding options are not easy to come by it is more than merely frustrating that when a business is owed money, it can be the demise of a potentially successful enterprise. The option of Invoice Financing has proved not only popular with businesses seeking an alternative, but an immediate and secure means of survival and expansion. As many of our clients will testify: credit where credit’s due.
Gulf Finance is an ambitious, progressive finance company licensed and regulated by the UAE Central Bank. We operate in the commercial and consumer markets, offering a variety of straightforward lending and deposit based products including SME Finance and Invoice Financing.
