In the modern age, businesses need to be flexible and adaptable. The advance of digital technology has greatly boosted the speed at which business is done, with international trading taking place faster than the eye can blink. To keep up with the blistering pace of modern commerce, businesses need a source of finance which lets them respond to every opportunity as it occurs, not a slow and lumbering process that hampers their progress.
Of course, the easiest way for a business to seize opportunities is to have a lot of cash on hand – money talks, after all. However, merchants rarely operate with a great deal of cash on hand, because there’s generally much more useful things to do with a stack of money than have it sitting in a bank account, ready to use “just in case”. Most businesses are keen to expand, and capital generated from past sales is usually re-invested quickly to help the business grow.
This means that businesses are forced to borrow money if they need it, since they rarely have the liquid assets available to invest themselves – it’s all tied up in investments. However, arranging finance for a large loan (sometimes of 7 figures or more) requires a lot of time and planning. It takes a good few months to arrange a residential mortgage, and traditional commercial finance is not any faster. Businesses need to be able to act immediately, though, and can’t afford to wait for weeks while their funds are cleared.
The Rise of Short Term Finance
Clearly there’s a gap in the market; businesses need access to high-speed finance in bulk, and traditional lenders are unable to meet their requirements. Here’s where lenders like Reward Finance Group come in, satisfying the needs of modern business where old-school finance can’t keep up. Short term financial solutions offer businesses the flexibility to break free of their cash flow, leveraging the value of their assets to engage with greater opportunities.
Short term finance has its roots in the 1960s, where the gradual relaxing of strict financial regulations allowed lenders to provide funds to businesses on a short term basis. As opposed to large loans made by traditional lenders, short term finance was often arranged in a matter of days instead of weeks, and repaid within a short period of time. This contrasts starkly with the long setup and repayment schedules of traditional long term finance.
The pace of short term finance has only increased with the passage of time, and now lenders are often able to provide an agreement in principle on the same day. Many short term finance firms pride themselves on their quick turnaround times, and boast a 7-day window between the submission of an application and funds being transferred.
How Does Short Term Finance Help Businesses?
Most businesses have some form of financial borrowing process in place; an arrangement with a high street bank, perhaps, or a long-term source of funding. These institutions provide useful everyday cover and are often able to provide long-term finance for large projects. However, these lenders have strict limitations on what they’re allowed to do, and often this means that their products have “blind spots”, customer requirements that they can’t fulfil.
For example, a business might decide to purchase the development rights for new premises, securing the ground rights to the site before construction can begin. They need to borrow heavily in order to finance this, but without construction permission no long-term financier will underwrite their project. This puts them in a Catch-22 situation; they need funds to begin construction, but they can’t get these funds until they’ve actually started developing the land. Unless they have sufficient capital on hand to kick-start the project they’re unable to move forward.
This is one of the classic problems which short term finance solves; a quick cash injection is enough to set the development in motion, allowing the project to go ahead and for the developer to secure a source of long-term finance. Once long term funding has been arranged, the short term loan can be repaid (plus interest). By using a short term loan to “bridge” the gap where there is no other source of finance, the business has been able to take advantage of an opportunity that would otherwise have remained out of reach.
Bridging loans like this are very common in the real estate industry, and are used by property developers and private individuals alike. The applications of short term finance extends far beyond this, though, and there are many other situations in which a short term financial solution can provide a business with the freedom to expand and adapt. Reward Finance Group have pioneered several new concepts for the provision of short term loans, and are a trailblazer in the industry.
Who are Reward Finance Group?
Reward Finance Group are a lender based in the North of England, with trading offices in Manchester and Leeds. The company is run by its two Managing Directors, Tom Flannery and Dave Jones, both of whom have a long track record of successful trading in the financial field. They are supported by a diverse and dedicated team of professionals, which includes their long-time Risk and Operations Director Tim Stafford.
The small, tightly-knit nature of the organisation means that there are no long lines of communications, and no lengthy waiting periods. When a client calls, they’re immediately put in touch with the person who calls the shots, who can give them a decision much more quickly than someone who has to go through a bloated corporate chain. This allows Reward Finance Group to react quickly and effectively to market requirements, adapting their services to the needs of their clients.
You could be forgiven for imagining that a small firm like this suffers from a lack of expertise, but in fact the reverse is true; between the three of them, the Reward Finance directors boast more than a century of experience in handling commercial finance. This expertise has led them to develop a select range of financial products to fulfil the needs of the modern marketplace.
What products do Reward Finance Group Offer?
The suite of financial products offered by Reward Finance is selectively chosen to meet the needs of specific businesses. The specialised nature of these products reflects the nature of the short term finance industry – there is no “one size fits all” solution, since every situation is different. This means that businesses need to offer specific, defined products, not a blanket, generic promise to provide funding.
To facilitate this, Reward Finance Group segregates its offerings into three distinct areas – Capital, Invoice Finance and Trade Finance. Within each of these categories the product on offer is flexible and can be tailored to meet the needs of many different clients.
Reward Finance Group – Capital Finance
Reward Finance’s capital funding solutions are the bread and butter of many businesses across the UK. From importer/exporters to sleeping bag manufacturers to schoolwear suppliers, businesses in many areas have taken advantage of the speed and security which Reward Finance can offer. This demonstrates the flexibility of the terms they can offer, as no two clients are the same. Some of the main considerations of their capital finance products are:
- Loan Term
The initial loan must not have a term of longer than 12 months. This reflects the fast-moving nature of the business, but if necessary a revised loan can be renewed before the 12 month term expires.
- Total Loan
Reward Finance offers loans of over £50,000, up to a total of £2 million. Loans smaller than this can generally be arranged quite quickly with mainstream providers.
- Loan Security
Every loan that Reward Finance offers must be backed by security – where this offers businesses flexibility is in the asset to which it can be attached. Reward Finance Group can use almost any asset as security, from company property to machinery, assigned debts , guarantees, residential and commercial investment properties (and more besides). This flexibility means that Reward Finance will find a solution that works for each individual borrower, not a rule of thumb which leaves some customers out in the cold.
- Fee Structure
The price of taking out a short term loan reflects the nature of the product; interest is usually chargeable monthly, rather than annually. The setup fees for the loan are also charged as a percentage of the total financial package, with a minimum charge of £3,000.
- Legal Fees
The arrangement of the loan is always subject to approval by legal experts. As such, there are some legal costs associated, and Reward Bridging Finance stipulates that the customer must pay for these costs.
- Payment Plan
Reward Finance recognises that a business might not have the liquid assets on hand to fund the setup costs of the loan at the time of arranging it; therefore, all loan costs are flexible, and can be paid at the end of the loan term.
Capital finance is Reward Group’s flagship product, and as the demand for short term lending continues to grow it’s likely that more and more firms will see the appeal of bridging loans. However, there are substantial opportunities available for businesses to take advantage of other types of finance from Reward Finance Group, such as their Invoice Finance and Trade Finance products.
Reward Finance Group – Invoice Finance
An innovative product which has become more widespread over the past decade is invoice finance, which allows businesses to speed up their cash flow without waiting on their customers to pay. It’s based on a simple idea; an unpaid debt is an asset, because it will, eventually, be paid. Therefore, a lender can provide funds against the debts which a company expects to collect, because this money will be provided in the future.
In the invoice finance system, a business sells the “debt” of an unpaid invoice to the lender for a percentage of its value. The company takes this money upfront and re-invests it however they feel necessary, allowing them to continue on as usual. The invoice is issued as usual to the company’s customer, with the usual payment terms attached. When they pay the invoice, the company pays back the money that they borrowed from the lender (with interest), and keeps the rest. In some arrangements, the lender will negotiate directly for the invoice to be paid, instead of the company who issued the invoice.
This transforms the issue of invoices; a business whose cash flow is hurting needs an invoice to be paid quickly, but all too often customers drag their feet when it comes to actually making a payment. Invoice finance allows for a business to receive funds as soon as the invoice is issued, making their cash flow much more fluid and predictable.
Reward Finance Group offers a fully bespoke solution for invoice financing, in contrast to many other lenders who ask that borrowers fit a set criteria. They pride themselves on their ability to meet the needs of any customer, and will be able to provide a solution when other lenders say no. This commitment to putting the customer first is what sets Reward Finance Group apart from the multitude of other short term lenders in the marketplace, and what helps them to prosper in this highly competitive sector.
Reward Finance Group – Trade Finance
The third arm of Reward Finance’s product range is their trade finance product, which facilitates expansion in the commercial sector. The basic premise of Reward Group’s trade financing is that good business focuses on opportunities, not on calculations and restrictions. A business might have the opportunity to strike an amazing deal with a client, but be unable to fulfil the strict criteria the many lenders have; although the deal itself is secure, and a great opportunity for both the business and their backers, many lenders simply won’t finance them because their balance sheet doesn’t tick all their boxes.
Reward Finance Group know that this blinkered approach to finance leaves many potentially lucrative opportunities by the wayside, and by being a little more flexible in their approach it’s possible to take advantage of these opportunities for profit. For example, Reward Finance recently helped a local furniture importer to seal the deal on a major transaction. Both their overseas supplier and their customer had agreed to the terms of the sale, and had agreed to purchase the goods in advance – all that remained was for the importer to secure funding to pre-buy the goods, and the deal was locked down. However, the importer’s balance sheet didn’t allow mainstream lenders to tick every box on their list; even though the deal was done, they were hampered by their inability to adapt to different circumstances.
Reward Group, however, are much more flexible, and were able to provide a loan that enabled the deal to be completed. The goods were successfully bought, imported and sold, all at a substantial profit for all parties concerned – this is a great example of the kind of win-win situations trade finance can create.
However, Reward Finance’s flexibility does not mean they’ll lend to anyone in any circumstances; it simply means that they can tailor the security they require to suit the customer’s needs. There are still certain terms which must be fulfilled in order to satisfy their security requirements:
- Type of Goods
The products being purchased must be non-perishable, and require no added value. This requirement eliminates the possibility that the goods lose value en route, or fail to achieve the necessary value from a third party.
The goods must already have been bought by the end buyer – this ensures that the borrower will be able to meet their repayments once the goods arrive.
Trade finance is offered at a percentage of the loan value, which is payable to the lender along with interest on the loan. This interest is payable every 30 days, reflecting the short-term nature of this loan type.
- Maximum Length
The trade cycle must not have a term longer than 120 days, which means that the loan will need to repaid in a similar time frame. This reflects the speed with which traders work, and how quickly they must secure funding.
The requirements which Reward Finance Group lay out ensure that although they’re providing funds for borrowers who have struggled to find alternate sources, they’re not providing finance to inappropriate borrowers. A “come one, come all” approach may seem like a good way to build a substantial balance sheet, but is an ultimately unsustainable business model. Reward Finance Group blend flexibility with security to provide finance which is reliable and empowering in equal measure.
Reward Finance Group in the Future
Moving forward, Reward Finance Group look set to continue greasing the wheels of UK industry, enabling businesses to make the most of every opportunity which comes their way. Whether it’s bridging the gap where no other lender can, providing cover for expansion or helping a family take back control of their business, Reward Finance Group undoubtedly have a place in the future of the UK financial sector.
Official resources about Reward Finance Group can be be found here:
Official resources about UK regulatory bodies:
- National Association of Commercial Finance Brokers (NACFB)
- Association of Bridging Professionals (AOBP)
- The Association Of Short Term Lenders (THEASTL)
- The Financial Conduct Authority (FCA)
- Bank of England Website
- Prudential Regulation Authority
- Financial Conduct Authority
- The Financial Policy Committee
- Financial Services Compensation Scheme
Other Unofficial Bridging Finance Guides
Covering areas of UK financial regulation and aspects of Bridging Finance.
- Alpha Bridging
- Association of Bridging Professionals
- Central Bridging
- Commercial Banking
- National Association of Commercial Finance Brokers
- Short Term Finance
- Taxi Finance
- The Association of Short Term Lenders
- The ASTL
- Watts Commercial
Bridging loan guide by Bridging Directory