Factris: EU Banks to restrict lending to SMEsGo to the news page
A regulatory framework for banks will soon change across Europe
SMEs trying to secure loans from banks will suffer the most from these changes
70% of SMEs rely on bank loans, signalling trouble for millions of small businesses
Changes in regulations across the EU will create new problems on small and medium-sized enterprises (SMEs) in an already difficult lending environment. These changes, set to take effect by 2022, will increase funding costs for banks and will thus make loans subject to increased scrutiny. This, in turn, means fewer loans will be issued to SMEs - especially those whose creditworthiness is considered substandard. Moreover, to make a difficult situation worse, this same funding cost increase will also make financing from banks more expensive.
Cash flow is already a significant problem for SMEs across Europe. According to a recent survey conducted by the European Central Bank (ECB), roughly 1 in 10 SMEs struggle to secure financing. This same survey revealed how dependent SMEs are on banks: approximately 70% of SMEs rely on bank loans to finance their business, foreshadowing what a massive problem this will prove to be for smaller enterprises across Europe.
Given the critical situation that many SMEs will soon face, it’s clear that alternative sources of financing are needed as banks will no longer be an option for many small businesses. The fintech company Factris has taken note of this and is readying themselves to help finance SMEs.
“Banks can be a nightmare for SMEs,” says Brian Reaves, CEO of Factris. “It has always been hard to secure a loan if you’re a small business. These new regulation changes will only make it more important for SMEs to avail themselves of alternative financing options available to keep their business going. Alternative options like factoring will prove to be a lifesaver for many SMEs.”
Factoring is a financing method offered by Factris where unpaid invoices are purchased in order to provide capital to SMEs for a small fee.
Continues Reaves, “We’re happy to be part of the solution to the problems posed by banks that are unable to help small businesses.”
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14.000 freelancers can now be paid earlier through factoring
A partnership has recently been announced between Factris and the Dutch freelancer platform Verloning.nl. This will allow freelancers working via Verloning to use Factris’ services, enabling them to get paid within 24 hours for invoices sent through Verloning.
People of Factris - behind the scenes!
Justas can safely be called a pioneer in non-banking invoice financing in Lithuania. Seeing the lack of this service in 2015, he had such faith in his business idea that in spite of the dissuasion of sceptics, he “rolled up his sleeves” and dived right in.