While banks have been seemingly overzealous in their credit approvals for consumers, small businesses have fallen victim to excessively risk-averse tactics from banks in recent years, a very real consequence of their over lending pre-banking crisis 2008.

Quite clearly, a broad-brush approach to assessing risk does not work, often resulting in businesses receiving too much or too little credit and in the case of small businesses, frequently none at all.

Relying on rigid, outdated rules to assess risk, banks are not best placed to take the highly tailored approach to lending that smaller companies require. Without the time taken to properly assess the individual situation, many small business loans are broadly determined as too risky and simply declined by traditional providers.

Alternative lenders have been borne from this rigidity, offering a more flexible, tailored approach to assessing risk, by combining innovative, time-saving solutions, with the expertise and consultancy of a bank.

The alternative approach in practice
Expert Tooling Automotive Ltd, a highly respected supplier and manufacturer for the British automotive industry, came to Nucleus because the enterprise needed to replace its existing invoice discounting facility whilst retaining the same pre-payment and funding limit. The funding was required to continue supplying specialist assembly line components to clients including Jaguar Land Rover, Aston Martin and Nissan. 

This heritage manufacturing business had gone from strength to strength in recent years, increasing turnover by five times in under seven years, yet its finance provider pulled back. Although still retaining a solid balance sheet and order book, after several overseas contracts ran into difficulty, Expert Tooling was asked to seek alternatives.

The deal was complex with a high concentration needed for one of the debtors. It required a specialist understanding of the industry as well as the ability to select the right product set to set the organisation on the right track. Armed with this knowledge and understanding, Nucleus was able to structure the facility appropriately and support the client's operations - the type of deal that traditional lenders recoil from, because of the input required.

After spending time getting to know the company, Nucleus was able to match the previous provision and deliver the bespoke £8 million invoice discounting facility that Expert Tooling required.
The funds have enabled Expert Tooling to continue providing a great service to clients and, crucially, to grow.

Growing a business in adverse times

For a business looking for growth finance, news seems to be appearing every day, which sets a bleak picture of the current lending market. But businesses shouldn't be disheartened. With the current turbulence in the traditional lending market, businesses should seek alternative finance lenders that have a true understanding of the sector and can support the mid-market.

For more information visit  www.nucleuscommercialfinance.com