UK’s Small Businesses Use Purchase Order Financing to Cover Big Ticket Expenses

Small and medium-sized businesses (SMBs) have not had a moment’s rest in the last few years. After enduring a crippling pandemic, they are now navigating interest rate hikes and rising inflation, which are affecting cash flow, said Mike Randall, CEO and co-founder at Simply Asset Finance, a London-based small business lending specialist.

It’s a situation that has been further complicated by global supply chain issues and mainstream lenders getting more selective with loans amid heightened scrutiny of banks’ balance sheets. “It’s tough because everything is costing more. And if you haven’t got cash to run a business or buy assets, it doesn’t work anymore,” Randall told PYMNTS in an interview.

To help plug that hole, Simply, which was launched in 2017 and serves close to 5,000 customers in the U.K. and Northern Ireland operating in sectors including manufacturing, construction and transport, provides asset-based loans to SMBs to cover both old and new equipment purchases, and as a result free up working capital to invest in growth.

Overall, the goal is to create a seamless lending experience for SMBs underpinned by the latest tech innovations without neglecting the human touch. “We go and sit with an SMB, understand their business situation, and then leverage data and technology we have to make a quick decision,” he said about the alternative financing model to traditional banks.

This means that once an agent has met with a customer and receives their approval to access their credit and asset data, the firm can pull up all that information via its APIs without the customer having to provide them, significantly reducing loan-processing times.

And with Simply Connect, the company’s digital brand, customers can access online tools to manage the funding process in a frictionless manner, from integrated credit data sources, automated know-your-customer (KYC) and customer ID verification to electronic documentation and automated payment of funds.

“It takes seconds [now] to give them a decision,” he said, “and you know that if you need money for something, the most anxious time is waiting to be told whether or not you can have that money.”

SMBs Are ‘Tough Cookies’

Open banking has revolutionized the lending space, enabling firms like Simply to easily pull customer data and access transaction history from several years back to make data-driven credit decisions.

It’s a technology that proved particularly useful during the pandemic when SMBs were severely cash-strapped and needed to postpone loan payments. “When the pandemic hit, we automated our forbearance procedure and made it mandatory for people to apply through open banking, and the uptake was immense. It was just so easy,” Randall remarked.

Moving forward, he said the uncertain macroeconomic environment, rising inflation and ongoing cost-of-living crisis will continue to affect small businesses’ cash flow. This means that the financing business will not be slowing down anytime soon, he added, with Simply also working with businesses to redesign their strategies so they are better positioned to withstand future economic shocks.

Finally, he pointed to SMBs’ exceptional resilience during the economic downturn, and their ability to get on with running their businesses amid the never-ending cycle of challenging situations as offering a promising, upbeat outlook for the SMB market as a whole.

As Randall said: “They’re tough cookies. There’s always one thing after the other, but they’ve remained resilient [through it all]. They’re knuckling down because they’ve got to put bread on the table and feed their families, and they are eager to get on with things.”


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