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Raising a Business Loan without the bank

Manufacturing is picking up. Slowly but surely the sector is starting to grow and more orders are coming in. But as business increases, one of the common complaints is a lack of support from the banks. Lack of finance, whether working capital, investment in plant or buying business assets can quickly hold back growth.

There is an alternative to bank lending. There a number of new lenders in the market which bypass banks altogether and involve individuals, pension funds and businesses lending directly to businesses. Whilst they are looking for good quality proposals and a decent track record, these lenders can often be more flexible and understanding than the bank.

One of the growing lenders in the area is Thincats (www.thincats.com) which brings together upwards of 500 high net worth individuals to lend collectively to businesses on a syndicated basis. Crucially, these are loans, not equity – business owners are not ceding control.

The process is modelled on the old style bank manager approach – individuals making decisions on a case by case basis. There is no credit scoring involved nor any blanket restrictions on sectors. Since it was formed 18 months ago, Thincats has lent around £6m to 43 companies. Most loans are in the £50,000 - £200,000 range and typically take 6 weeks to complete. The ability to recognise underlying value in the business through taking account of assets that banks do not value has helped Thincats grow into a flexible lender.

We have seen Thincats loans used to fund business growth and acquisition, to repay expensive invoice finance arrangements, and to provide extra funding over and above existing bank facilities. We have even had banks refer their clients to us when they cannot help. This non-standard business lending is a fast-growing sector of the funding market at present, and with the current inflexibilities in this area, is set to continue to grow very quickly. Steve Grice is from Ludgate Finance, who are one of the principal sponsors for Thincats.

Steve Grice

Steve Grice

Business Development Manager at Ludgate Business Finance, College Governor at City of Wolverhampton College

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