Innovative alternative to bank lending considering moving to Wales

Alternative Business Funding

A Bristol firm pioneering an online platform providing a wide range of non-bank funding options for growth focused SMEs, from equity to asset-based lending, is considering relocating to South Wales.

New legislation means that from next year banks will have a legal obligation to refer rejected funding proposals for SME applicants, thus creating a legislative driver for alternative funding platforms.

This initiative is being driven by Alternative Business Funding (ABF), whose chairman Adam Tavener, has been the pioneer for an innovative collaboration model between the alternative funding sector, UK Treasury and British Business Bank.

Mr Tavener is also chairman of Clifton Asset Management, the UK’s leader in pension led funding.

ABF’s finance platform creates a market place for the provision of alternative funding for UK SMEs, a market which is expected to grow to £4.4bn in 2015 (2014 £1.7bn) as compared with the £90bn total SME finance market.

The company, which is also in discussions with the Dutch government, is one of a limited number of finance platforms being currently assessed by British Business Bank for designated status in December this year.

These will be the only platforms licenced to receive and process the bank declines under the legislation.

Now ABF is contemplating establishing its operation in Wales and has appointed Raman Mistry as chief executive designate.

Mr Mistry was until recently chief executive of Newport-based the Alacrity Foundation, the world’s only charitable graduate entrepreneur incubator backed by Sir Terry Matthews’ fund Wesley Clover, and chaired by Professor Simon Gibson.

There already in excess of 60 subscribed funders on ABF’s portal including Funding Circle, Seedrs, Crowd Cube and Market Invoice which are receiving applications or internally referring business applicants rejected by a bank or alternative funder to other funders on the site.

Gambit input

The company is being advised by Frank Holmes, senior partner of Cardiff-based Gambit Corporate Finance, who believes that ABF could also provide a ‘white label’ version for the proposed Development Bank for Wales where companies turned down for bank funding could be advised on alternative options provided by the site via the business support regime in Wales.

Mr Holmes said: “ABF is the innovator and market leader in this space business and is wiling to establish its business in Wales by the end of the year. And either Finance Wales or the Development Bank could be first to adopt this technology for the benefit of local SME’s as well as the rest of the UK.

"This is an opportunity we cannot afford to allow to pass us by."

He added: “Much debate and energy has been expended in Wales in respect of the role of Finance Wales and the introduction of a Development Bank to address SME funding issues. 

"Surely this innovative platform is the way forward and the time to embrace it is now as the appetite for SME funding nationally has grown from 18 to 35% in the last 12 months.

"Imagine a development bank where the relationship managers morph into the advisory and migrate to the outcome focused space using quick and efficient portal technology to find funding solutions for their SME customers via the alternative sector?

“And consider a bank versus non-bank market place being transferred into an environment where bank relationship managers, development bank advisers, corporate finance specialists, business brokers and other lenders all use the technology at hand to ensure the customer gets the best outcome even though that may be sourced from a number of different providers.”

Frank Holmes is a founder partner of Gambit Corporate Finance, a leading advisory firm specialising in mergers and acquisitions and fund raising in the UK and overseas, with offices in Cardiff and London.

To view the Wales Online article click here.

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